(Bloomberg) -- Oil was poised for a fifth weekly gain as the market tightened amid a global energy crunch that’s set to increase demand for crude.
Futures in New York held above $73 a barrel, while global benchmark Brent traded near its highest settlement since 2018. Crude inventories have shrunk from Europe to the U.S., even as OPEC+ adds more supply, with demand for oil products in power generation expected to climb following a surge in natural gas prices ahead of the northern hemisphere winter.
Oil has rallied recently after a period of demand uncertainty due to the rapid spread of Covid-19’s delta variant, with some of the world’s largest traders and banks predicting that prices could climb even further on the energy crunch. The market will also be watching for the outcome of China’s first ever auction of crude from its strategic reserves later Friday.
Brent has firmed in a bullish structure as the market has tightened. The prompt time spread was 81 cents in backwardation -- where near-term contracts are more expensive than later ones. That compares with 78 cents a week earlier.
Oil is most likely headed above $80 a barrel, partly as higher natural gas prices boost demand, Vitol Group Chief Executive Officer Russell Hardy said in an interview on Thursday. Goldman Sachs Group Inc. is predicting that crude could surge to $90 if winter is colder than normal.