The start of the week has brought fresh gains for the crude market as oil has rallied on signs of a tightening market amid a global energy crunch.
Crude oil futures increased on Monday over dwindling inventories with US stockpiles near a three-year low while demand picking up rapidly post the pandemic waves and projections suggesting that it would be stronger than expected in the near term.
Disruptions in the US Gulf Coast production following Hurricane Ida and other storms have led to sharp draws in the American and global inventories.
West Texas Intermediate or WTI for November delivery advanced 1.5 per cent to $75.07 a barrel on the New York Mercantile Exchange, while Brent for November settlement added 1.4 per cent to $79.18 a barrel on the ICE Futures Europe exchange.
Global crude prices have gained almost 80 per cent level in last one year and more than 45 per cent in first six months of 2021. At the current $79 a barrel, Brent crude is already at multiple month high and set to breach two and half year high rate of $80 a barrel soon.
The projections for crude prices has also maintained positive growth. Analysts are now maintaining that Brent crude may be around $80 a barrel in the third quarter of 2021 with further gains upto $10 a barrel to $90 a barrel in later parts of the year. A Bank of America projection puts crude at over $100 mark by summer of next year.
Higher crude means more petro dollar spend by India as it has to import more than 80 per cent of its domestic requirements. The rising demand for oil on the country is also a concern as together it could jack up the country’s oil import bill.
The country’s crude oil imports has already risen l to a three-month peak in August, rebounding from a near one-year low hit in July. Crude oil imports last month rose 15.8 per cent versus July and were also 3.1 per cent higher than a year-ago at 17.39 million tonnes, according to PPAC.