The rally in energy commodity prices may be witnessing a change of leader. Natural gas seems to have dominated so far, with prices soaring in Europe, Asia and the United States. Currently, however, attention may be shifting towards Brent crude oil.
Brent crude futures rose 0.2 percent on Friday to $77.41, the highest level since October 2018, based on closing prices.
Oil inventories are melting
Thus, for the full week, the barrel may have appreciated by about 2.5 percent due to global supply concerns after hurricanes in the U.S. damaged refinery facilities on the Gulf of Mexico coast. EIA data showed U.S. crude inventories fell by 3.5 million barrels to 414 million last week and were at their lowest level since October 2018. API data also showed U.S. crude inventories fell by 6.1 million barrels last week, nearly three times more than the market expected, which was also the eighth consecutive weekly decline. Meanwhile, refinery utilization rates on the East Coast rose to 93 percent, the highest rate since May 2019, indicating strong demand for fuel as travel bans ease.
H4 chart of Brent crude oil CFDs. Conotoxia cTrader platform
Huge demand for gas still evident
Back to natural gas prices, these seem to be bouncing back from two-week lows. U.S. natural gas futures were trading near $4.9 per million British thermal units, rebounding from near $4.7 and approaching the more than 7.5-year high of $5.5 reached in mid-September. Prices may rise on strong demand for U.S. exports, as there has been huge demand for gas around the world, and production and output appear to be falling short of consumer demand. Gas prices in Europe remain at record levels around $24/mmBtu and near $27/mmBtu in Asia.
Daniel Kostecki, Chief Analyst Conotoxia Ltd.
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