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Tsvetana Paraskova

Tsvetana Paraskova

Tsvetana is a writer for Oilprice.com with over a decade of experience writing for news outlets such as iNVEZZ and SeeNews. 

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Oil Prices Top $80 Per Barrel For First Time In 3 Years

Oil prices rose early on Tuesday, with Brent Crude topping $80 a barrel for the first time in three years as the natural gas shortage and price spikes spill over into the crude oil futures market.

As of 7:09 a.m. EDT, the international benchmark, Brent Crude, traded up by 0.62% at $80.02—the highest level since October 2018.

The U.S. benchmark, WTI Crude, was above $76 per barrel, rising by 0.87% at $76.14—the highest level since early July.

Energy commodities have rallied in recent days after the natural gas shortage in Europe went global with a ripple effect on gas, coal, and crude oil prices. The record-high natural gas and power prices in Europe are leading to additional demand for coal and oil in the power generation sector. Gas-to-oil switching could further accelerate as we go into the winter heating season in the northern hemisphere.

Last week, liquefied natural gas (LNG) prices in Asia soared by 10 percent to at least $27 per metric million British thermal units (mmBtu), industry sources told Reuters. Despite the record prices for this time of the year, demand is strong in Asia as buyers have little choice amid tight natural gas supplies globally.

The gas crunch in Europe and Asia is also pushing the U.S. benchmark gas price, Henry Hub, higher, at above $6/mmBtu on Tuesday to the highest in over seven years.

Recovering oil demand and an underwhelming supply response, coupled with expected higher oil consumption in a gas-to-oil switch, are tightening the crude market and deepening the backwardation in the futures curve—a sign that market participants believe supply will continue to be tight.

“Low stockpiles of most fuels and limited time left to replenish before the peak demand season has left consumers around the world increasingly exposed to a colder than normal winter,” Saxo Bank said in a Tuesday note.

“The next focus is at what level demand will continue to suffer thereby helping to balance the market,” the bank’s strategy team added.

By Tsvetana Paraskova for Oilprice.com

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Leave a comment
  • George Doolittle on September 28 2021 said:
    BP Thunderhorse starts producing even moar with moar en route for the GOM.

    "Demand meet supply" sounds like a working free market to me.

    Long US Treasuries
    Strong buy
  • Mamdouh Salameh on September 28 2021 said:
    The momentum of crude oil prices will take Brent crude far beyond $80 a barrel before the end of the year.

    Brent could go up as high as $85 and even touch $90 supported by a roaring global economy, a steep decline in global oil inventories and a gas-to-oil and coal-to-oil switching because of rising prices of gas and coal and a shortage of supplies currently.

    Dr Mamdouh G Salameh
    International Oil Economist
    Visiting Professor of Energy Economics at ESCP Europe Business School, London

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