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Futures Movers: Oil up for 4th straight session, with Brent logging another close near 3-year high

Oil futures climbed for a fourth straight session on Friday, with Brent crude, the global price benchmark, marking another settlement at its highest since October 2018.

“The market is pricing in a prolonged impact of supply disruptions, and the likely storage draws that will be needed to fulfill refinery demand,” said Louise Dickson, senior oil market analyst at Rystad Energy, in daily commentary.

“Even as barrels come back on production, the perceived supply shortage, paired with bullish hints of demand recovery, have significantly tightened the market, at least in the very short-term, paving the ascent of Brent to above $77 per barrel,” she said.

West Texas Intermediate crude for November delivery

the U.S. benchmark, rose 68 cents, or 0.9%, to settle at $73.98 a barrel on the New York Mercantile Exchange. Prices saw the highest front-month contract finish since July 13 and gained 3% for the week, according to Dow Jones Market Data.

Front-month November Brent

rose 84 cents, or 1.1%, at $78.09 a barrel on ICE Futures Europe, logging another settlement at the highest in nearly three years. December Brent

the most actively traded contract, climbed 77 cents, or 1%, at $77.23 a barrel.

Both WTI and Brent crude scored a fourth straight session rise. For the week, front-month Brent prices were up nearly 3.7%.

“The price rise is being facilitated by limited supply (production outages in the Gulf of Mexico, lower OPEC+ production than agreed) coupled with robust demand, causing the oil market to tighten noticeably,” said Carsten Fritsch, analyst at Commerzbank, in a note.

The Bureau of Safety and Environmental Enforcement on Thursday estimated that 16.2% of U.S. Gulf oil production, or around 294,414 barrels a day, remained shut in after Ida made landfall on the Louisiana coast on Aug. 29. The BSEE didn’t have an update Friday by the time oil prices settled. Meanwhile, refinery activity has rebounded more quickly than production, analysts noted.

Meanwhile, Baker Hughes

on Friday reported that the number of active U.S. rigs drilling for oil climbed by 10 to 421 this week, up a third week in a row as a recovery in Gulf continues.

Reuters earlier this week reported that members of the Organization of the Petroleum Exporting Countries and its allies, known as OPEC+, have struggled to boost production after agreeing to begin further easing output curbs starting in August.

With the OPEC+ meeting for Oct. 4, the group of oil producers will “need to decide on a supply plan — either to stoke oil prices higher towards $80 per barrel Brent, or take action to boost supply and normalize prices,” said Rystad Energy’s Dickson.

“If OPEC+ decides oil is getting too expensive,  it could call on some key producers with sizeable spare capacity, such as Saudi Arabia, to step up production and trim prices back towards the low to mid  $70s,” she said.

For now, crude balances remain bullish, driven by gasoline demand, but lower demand for non-core refined products such as jet fuel will put bearish pressure on liquids balances,” said Dickson. There’s also a “healthy dose of downside risk for prices” as flu season and potential new CCOVID-19 variants approach.

On Nymex Friday, October gasoline

added 0.7% to $2.188 a gallon, with the contract up almost 0.8% for the week. October heating oil

tacked on 0.8% to $2.267 a gallon, for a weekly rise of 2.6% and highest finish since October 2018.

October natural gas
which expires at the end of Tuesday’s session, settled at $5.14 per million British thermal units, up 3.3% on Friday to post a weekly rise of 0.7%.

Also see: Lumber demand looks to strengthen as price volatility gives way to a ‘new normal’

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