Oil gains from highest close since 2014 as U.S. dollar falls

(Bloomberg) --Oil continued its advance from the highest close in seven years as the U.S. dollar fell and investors assessed the energy crunch roiling global markets.

Futures in New York surpassed $83 a barrel Tuesday, gaining as much as 1.4% from Monday’s settle at the highest since October 2014. Meanwhile, the Bloomberg Dollar Spot index fell 0.4%. Russia is keeping a tight grip on gas supplies to Europe and OPEC+ hasn’t pumped enough crude to meet its production target, exacerbating an existing supply crunch in energy markets.

Crude has risen for the past eight weeks as the energy crisis -- prompted by shortages of natural gas and coal -- coincided with a rebound in demand from key economies emerging from the pandemic. Stockpiles are expected to draw this quarter, tightening the market further, although there are signs that higher energy prices are hurting industrial output in Europe and Asia.

“The tight physical oil balance should prevail, and prices are to remain at elevated levels for the remainder of the year,” PVM Oil Associates Ltd. analyst Tamas Varga wrote in a note.

Oil refiners in Asia are raising run rates, partly in response to increasing demand from the power sector for petroleum products like gasoil and fuel oil.

Prices:

• West Texas Intermediate for November delivery rose 1.4% to $83.55 a barrel on the New York Mercantile Exchange at 10:50 a.m. London time.
• Brent for December settlement added 0.9% to $85.11.
• The prompt timespread for Brent was 66 cents in backwardation, compared with 75 cents at the start of the month.

Gazprom PJSC’s gas exports to its main markets fell in the first two weeks of October to the lowest since at least 2014 for the time of year, as domestic demand absorbed most output gains. Auctions for pipeline capacity next month gave no indication that Russia is planning to increase shipments to Europe.