Oil Continues Hitting Multi-Year Highs as Winter Approaches

This morning oil prices continued their trend of hitting multi-year highs. Along with the recovering demand that the world is facing, natural gas and coal prices continue to spike dramatically, calling for many consumers to switch over to oil and diesel for power sources. This morning crude oil opened at $82,60, diesel at $2.5719, and gasoline at $2.4795.

As some parts of the country and worldwide are already seeing the effects of a colder winter, more attention is being brought to power generation sources coming from natural gas and coal. This is having a direct impact on oil prices; as analysts at ANZ bank said, “Easing restrictions around the world are likely to help the recovery in fuel consumption, as gas-to-oil switching for power generation alone could boost demand by as much as 450,000 barrels per day in the fourth quarter.” While these easing restrictions are expected to help fuel consumption recovery, a pressing concern is the colder temperatures that have already made their way into the northern hemisphere. These temperatures will likely make oil supply problems worse and potentially extend the deficit the market is facing.

As the situation with colder weather intensifies around the globe for fuel prices, it seems as if OPEC+ will not be extending a helping hand as they have not made any significant changes or announcements over the past two weeks. Along with President Biden, other world leaders such as Japan’s Prime Minister Fumio Kishida are also urging oil companies in their regions to consider ramping up the output or lowering prices completely. This could significantly impact prices going forward, but it is too soon to tell whether any of these companies will end up acting on their leader’s wishes.