Boosted by energy crisis fears New York crude broke through the $70 mark for the first time in seven years

News on October 12, the global energy crisis continued to boost crude oil demand, and New York crude oil closed above
$70 for the first time in seven years.

Crude futures for November delivery rose $1.
17, or 1.
5 percent, to settle at $
80.
52 a barrel on the New York Mercantile Exchange.
This is the first time the front-month WTI crude oil contract has closed above
$80 since October 31, 2014.
Brent crude futures for December delivery rose $1.
26, or 1.
5%, to settle at $83.
65 a barrel, the highest close since Oct.
9
, 2018.

Brian Steinkamp, commodity futures analyst at SchneiderElectric, said: "From a fundamental point of view, the situation has hardly changed
.
Tight supplies, a stable global coronavirus situation, and a continued recovery in economic activity have led to higher prices across the board for all fuels this year, most recently with fuel prices soaring
in the northern hemisphere.
"In the face of rising prices of various fuels, there is a growing focus on crude oil and its alternatives
.
Saudi Aramco reported last week that crude oil demand increased by 500,000 barrels
per day due to a sharp rise in natural gas prices.
”

"Last week, OPEC and its allies decided to increase oil production to the previously agreed level of 400,000 barrels per month, which is still a big boon for current oil and refined products," said
Tyler Richey, co-editor of Sevens Report Research.
"Supply-side news, combined with most encouraging economic data, suggests that demand should remain healthy in the coming months and keep the spot market running a deficit
.
"

OPEC+ raised crude oil production by 470,000 barrels per day in September, but many members are still struggling to meet their production quotas
, according to a survey released Monday by S&P Global Platts Energy Consulting.
The survey showed that the 19 member countries with production quotas under the OPEC+ supply agreement combined had production quotas below 570,000 b/d
that month.

At the same time, gas is "clearly overbought .
.
.
Futures prices are up nearly 70 percent from their mid-August lows," Ritchie said
.
"Although in the medium-term framework, the trend of natural gas is still quite optimistic.
.
.
But we shouldn't be surprised to see the market here taking a breather and digesting the recent rally
.
"Soaring gas prices have led to an energy crisis
in Europe.
Natural gas prices fell from their highs last week after Russian President Vladimir Putin said he would meet export promises, but gas prices remain at historic highs
.

In the US, natural gas fell about 4% in November to close at $5,345/MMBtu, a two-week low
.
It fell 2%
on Friday.
However, natural gas prices rose by almost 33%
in September.
The sky-high price of the fuel is believed to have increased the demand for crude oil, and operators of natural gas power plants, especially in Asia, are expected to switch to crude oil
.

Analysts at Société Générale point out that oil-fired electricity accounted for only 3% of global electricity in 2020, down from 11%
30 years ago.
In Europe, oil combustion has never exceeded 1.
4%
of total electricity generation since 2018.
But in the Middle East and elsewhere, several utilities, including Pakistan, Kuwait and South Korea, have begun increasing oil purchases
.

"Although only a few utilities are able to source and use additional fuel oil on the spot market to avoid higher LNG prices, competing fuels still appear likely to have a small impact
on oil prices," Societe Generale analysts wrote.

Oil did not initially rise along with natural gas, analysts said, possibly because the prices of the two commodities had previously been decoupled because they were no longer directly competitive in terms of inputs, but also because concerns about COVID-19 and economic uncertainty left crude unaffected
.
As of late September, oil prices were at a two-month high due to stronger demand and the ongoing hit to oil production from the damage caused by hurricanes in the Gulf of Mexico
.

Other refined products traded on the New York Mercantile Exchange closed higher, with gasoline up 0.
5 percent at $2.
378 a gallon in November and heating oil up 1.
51 percent at $2.
515 a gallon in November, the highest level
since Oct.
29, 2014.
Both contracts settled at their highest levels
since October 2014.