Oil advanced at the open of trading in Asia after an eighth weekly gain with the market facing a global energy crunch ahead of winter.
Futures in New York climbed near $83 a barrel after adding 3.7% last week, capping the longest run of weekly gains since 2015. A shortage of natural gas and coal from Asia to Europe is driving additional demand for oil products in power generation. That’s coincided with key economies rebounding from the pandemic, leading to a significant tightening of the market.
Oil has rallied to the highest level since October 2014, in part also due to a supply disruption in the Gulf of Mexico from Hurricane Ida, following a period of demand uncertainty stemming from the delta variant of the virus. Asian demand for U.S. crude is rising as the energy crisis boosts prices for other grades that are priced against global benchmark Brent.
The prompt timespread for Brent was 71 cents in backwardation — a bullish market structure where near-dated contracts are more expensive than later-dated ones. That compares with 73 cents a week earlier.
Oil demand is rebounding across the globe as nations recover from the pandemic. India’s diesel consumption is gathering pace with the onset of annual festivals, boosting sales to about pre-virus levels in the first half of October. The U.S., meanwhile, will open its borders to vaccinated foreigners on Nov. 8, providing a boost to the battered aviation sector.