By Gina Lee
Investing.com – Oil was up Friday morning in Asia, with some industries beginning to switch fuel from the higher-priced gas to oil. Doubts also remain on whether the U.S. would release oil from its strategic reserves for now.
Brent oil futures rose 1.11% to $82.86 by 11:48 PM ET (3:48 AM GMT) and WTI futures jumped 1.19% to $79.23. Both Brent and WTI futures rose about 1.1% on Thursday, resuming their rallies, and are set to jump 4% this week.
“Oil prices lifted after the U.S Energy Department said it has no plan ‘at this time’ to tap into U.S. strategic oil reserves to cool the rally in oil prices,” Commonwealth Bank analyst Vivek Dhar said in a note.
However, the social media post which said that the U.S. Department of Energy was not considering tapping into the strategic petroleum reserve “at this time” was inaccurate, a department source told Reuters.
The week has been a positive one overall for the black liquid, thanks to a switch to oil for power generation and by some industries, as gas prices increase. The Organization of Petroleum Exporting Countries and allies (OPEC) also decided to continue with its plans to add only 400,000 barrels per day of supply in November 2021 when it met earlier in the week.
The surge in gas prices and the extent of fuel switching from gas to oil will be the key factor for investors to watch.
“An acceleration in gas-to-oil switching could boost crude oil demand used to generate power this coming northern hemisphere winter,” ANZ commodities analysts said in a note, adding that U.S. distillate stocks, which include diesel and heating oil, are at their lowest heading into winter since 2000.
JP Morgan analysts said in a note that they have yet to hear of significant gas-to-oil switching in the European power sector. “This means that our estimate of 750,000 barrels per day of gas-to-oil switching demand under normal winter conditions could be significantly overstated,” the note added.
Oil Up Over Gas-to-Oil Switch, Doubts on Whether U.S. WIll Release Reserves Remain
Fusion Media or anyone involved with Fusion Media will not accept any liability for loss or damage as a result of reliance on the information including data, quotes, charts and buy/sell signals contained within this website. Please be fully informed regarding the risks and costs associated with trading the financial markets, it is one of the riskiest investment forms possible.