Oil futures: Brent holds above $78/b, poised to end week 0.6% higher
Quantum Commodity Intelligence - Crude oil futures nudged higher on Friday with the front month continuous contract poised to end the week 0.65% higher - an impressive run of seven weeks of gains that saw the international benchmark hit a three-year high.
In what was a choppy week for trade, Brent crude futures was subdued for the first day of a new month and the start of the quarter, with the December contract trading in a $1.28/b range of $77.57-78.85/b on Friday.
By time of press (1530 GMT) the contract was trading at $78.55/b, just off the day's highs and up $0.24/b from Thursday's settle.
At the same time, November NYMEX WTI was trading at $75.12/b, versus Thursday's settle of $75.03/b.
Oil prices surged more than $2/b late Thursday following reports China would embark on an energy buying spree in a bid to tackle widespread power outages in the country.
Fears over a winter energy crunch have also outweighed the build in US inventories this week and the stronger dollar, but the higher prices has led to speculation that OPEC+ may look to accelerate its planned output increases from the current monthly hikes of 400,000 bpd when it meets Monday.
However, other analysts struck a more bullish tone.
"The supply picture is without a doubt materially tighter than it was at the last OPEC+ meeting, but it would be uncharacteristic for OPEC+ to implement a knee-jerk policy in reaction to the energy crisis just yet," said Louise Dickson, oil markets analyst with Rystad Energy.
"The most likely scenario is that the organization sticks to its plan to incrementally increase production by 400,000 bpd, prudently waiting to see just how deep the natural gas and electricity crisis contagion spills into the market," she said.
In Asia, physical JKM was assessed at a record high of almost $35/mmBtu and JKM swaps for the key winter months traded above $34/mmBtu, according to S&P Global Platts.
European TTF gas for November hit a record €100/MWh early Friday following reports of additional Chinese energy demand, while Australian coal futures for November reached fresh highs of $220/mt Friday.
"The EU natural gas price (TTF) has climbed to €100 per MWh today for the first time. This was due first and foremost to news that noticeably less gas from Russia has been transported to Germany via the Yamal pipeline of late," noted Commerzbank.
The surge in power generation fuel prices is expected to impact oil, with some forecasts expecting additional demand of up to 1 million bpd over winter.
Benchmark 10ppm gasoil cracks rallied to a post-pandemic high of more than Brent +$10/b on Thursday, while physical HSFO 180 cst was pegged at a rare premium to Brent, according to Quantum data.
