Oil held above $80 a barrel after a four-day rise as the global energy crisis boosted demand and the International Energy Agency warned of a surge in volatility and the possibility of higher prices.
West Texas Intermediate remained steady after closing at its highest level since October 2014 as the IEA said in its flagship report that the world is unable to invest in energy on the scale needed to prevent a surge in fossil fuel prices while slipping away. catastrophic climate change.
On the physical market, Russia's Falcon, a high refined diesel grade, received its highest premium to benchmark prices since January 2020, according to traders and data compiled by Bloomberg. This provides further evidence that rising gas production will benefit oil as users look for alternatives.
Oil prices have risen sharply this year as increased activity after the pandemic has led to increased consumption and depleted reserves. In addition, shortages of natural gas and coal have increased demand for alternative energy and heating fuels in Asia and Europe as the Northern Hemisphere winter approaches.
"I'm not ready to say we've reached the limit, but whether oil reaches $90-100 will depend on how cold it gets," said John Driscoll, chief strategist at JTD Energy Services Pte. "In the meantime there could be some surge, some volatility. People are watching the mercury right now."
Prices:
WTI for November delivery fell 0.1 per cent to $80.57 a barrel on the New York Mercantile Exchange at 6:36am in London.
Brent crude for December delivery was little changed at $83.39 a barrel on the ICE Futures Europe exchange.
As part of the IEA's World Energy Outlook report, Fatih Birol, head of the group, warned that "there is an imminent risk of increased turbulence in global energy markets". The Paris-based organisation represents some of the world's most industrialised countries, including the US, Germany and Japan.
While oil consumption is rising rapidly, the Organisation of Petroleum Exporting Countries and its allies have taken a cautious approach to restoring production, which was halted last year. OPEC will provide its latest monthly snapshot of global market conditions later on Wednesday.
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The oil market's general bullishness is reflected in increasingly lagging time spreads, with short-term prices higher than further. The fast WTI spread was 76 cents a barrel at backwardation, down from 29 cents at the start of last week. Brent's quick spread is 70 cents at backwardation.
Nevertheless, US oil demand may be showing signs of slowing as the survey predicts a rise in both oil and gasoline inventories. Gasoline stocks could rise by 1.25 million barrels, the fourth weekly increase if official data to be released on Thursday confirms it.
Eleena Timmons