On October 11, oil prices continued to move higher with both Brent and West Texas Intermediate (WTI) at more than $80 a barrel. WTI was trading at $80.66 and Brent at $83.46 in early morning London trade.
On Friday, for the first time since November 2014 and so far, oil prices went above the $80 mark, and the trajectory remains upwards.
According to Warren Patterson, head of commodities strategy at ING, power concerns continue to provide massive support to the oil market. He commented:
“This is a trend we are likely to see continue through the winter. China is taking steps to try to alleviate the tightness in the domestic coal market, by pushing local mines to increase output. However, heavy rains in Shanxi province over the last week have led to some mines having to temporarily shut in the region.”
Gas prices soared
Following comments from the Russian president Vladimir Putin that his country would be willing to stabilize gas markets, Patterson said that in Europe natural gas prices had come off their highs recorded last week. However, he added that price levels remained elevated.
According to Patterson, the TTF gas price from the Netherlands was trading just under €88 a megawatt-hour – equivalent to $170 a barrel of oil. He stated:
“The latest data from [the Gas Infrastructure Europe association] GIE shows that gas storage in Europe is a little over 76% full at the moment, compared with a five-year average of almost 91%.”
It was no surprise to see speculators increasing their net longs in both ICE Brent and NYMEX WTI, given the move higher in the oil market in recent weeks.