Rising Oil Prices Driven by Supply Shortages in Upcoming Months

Oil prices surged on Friday, heading towards weekly gains exceeding 2%, amid increasing signs of supply shortages over the next few months, coupled with rising expectations for a shift to oil products due to the significant increase in natural gas and coal prices. Brent crude futures rose by 28 cents, or 0.3%, to $84.28 per barrel at 0156 GMT, after an increase of 82 cents in the previous session, aiming for a 2.3% rise for the week. Meanwhile, U.S. West Texas Intermediate (WTI) crude rose by 30 cents, or 0.4%, to $81.61 per barrel, after an increase of 87 cents on Thursday, on track for a weekly gain of 3%. Analysts pointed out a sharp decline in oil inventories in the Organization for Economic Cooperation and Development (OECD), reaching their lowest level since 2015, according to Reuters. Demand has recovered with the rebound from the COVID-19 pandemic, alongside an industry shift from natural gas and coal, which have seen price spikes, to fuel oil and diesel for energy needs. Commonwealth Bank commodity analyst Vivek Dhar stated, "This energy crisis, especially in coal and gas, has been beneficial for oil." The International Energy Agency indicated on Thursday that the energy crisis is expected to increase oil demand by 500,000 barrels per day. This could lead to a supply gap of about 700,000 barrels per day until the end of this year, until the Organization of the Petroleum Exporting Countries (OPEC) and its allies, known as OPEC+, add more supplies as planned in January.