World Oil Prices Soar To The Highest Level Since 2014

Illustration. (Photo: Doc. Antara)

JAKARTA - Oil prices surged again in late trading Tuesday, with US crude hitting its highest level since 2014 and Brent rising to a three-year high, after producer group OPEC+ stuck to plans to increase output rather than increase it further.

The price of U.S. West Texas Intermediate (WTI) crude oil futures for November delivery added $1.31, or 1.7 percent, to settle at $78.93 per barrel. During the session WTI oil prices jumped more than 2.0 percent to as high as $79.48, the most in nearly seven years.

Brent crude futures for December delivery rose 1.30 dollars, or 1.6 percent, to close at 82.56 dollars per barrel. Previously, Brent had hit a three-year high of 83.13 US dollars per barrel.

Both contracts extended gains made on Monday October 4, when WTI jumped 2.3 percent and Brent jumped 2.5 percent.

On Monday (4/10/2021), OPEC+ agreed to comply with a July pact to keep increasing production by 400,000 barrels per day (bpd) every month until at least April 2022, removing 5.8 million bpd from existing production cuts.

"The market is aware we're going to be in short supply for the next few months and OPEC seems happy with that," said Phil Flynn, analyst at Price Futures Group in Chicago.

Oil prices have surged more than 50 percent this year, adding to inflationary pressures that fear crude-consuming countries such as the United States and India will derail recovery from the COVID-19 pandemic.

Late last month, the OPEC+ Joint Technical Committee (JTC) said it expected a supply deficit of 1.1 million bpd this year, which could turn into a surplus of 1.4 million bpd next year.

The group is gradually easing the record production cuts it made last year and some analysts expect that the alliance will expand production to a greater extent to curb prices.

Despite the pressure to increase output, OPEC+ is concerned that a fourth global wave of COVID-19 infections could depress the recovery in demand, a source told Reuters slightly ahead of Monday's October 4 talks.

Soaring global natural gas prices, which could prompt some power plants to switch from gas to oil, mean crude prices are likely to remain supported despite a possible near-term pullback, said Tradition Energy's director of market research, Gary Cunningham.

"I think there's going to be some profit taking, but we're going into winter with very high natural gas prices," Cunningham said, adding that he expected Brent to find support around $80 and WTI in the mid-70s. .

Investors will look to Wednesday's crude inventories data from the US Energy Information Administration (EIA) for further direction. US crude and distillate inventories likely fell last week, a preliminary Reuters poll showed.