Oil prices edged higher on Tuesday after trading down earlier, looking set to sustain a rally driven by strong demand in the United States, the world’s biggest consumer of oil and its products.
Brent crude was up 13 cents or 0.2% at $86.12 a barrel by 0427 GMT, after gaining 0.5% on Monday. U.S. oil gained 5 cents or 0.1% to $83.81 a barrel, having finished unchanged the previous session after testing new highs.
While China’s red-hot power and coal markets have cooled somewhat after government intervention, energy prices remain elevated worldwide as temperatures fall with the onset of the northern winter.
“Forecasts for a colder November have energy traders bracing for a very tight market that will be met (with) unprecedented demand this winter,” OANDA senior market analysts Edward Moya said in a note.
“This oil market will remain tight and that should mean a headline or two away from $90 oil,” he said. Goldman Sachs said Brent was likely to push above its year-end forecast of $90 a barrel.
The bank estimated switching to oil from gas may add 1 million barrels per day (bpd) to oil demand. Gasoline and distillate consumption is back in line with five-year averages in the United States after more than a year of depressed demand. [REUTERS]
