Global oil prices hit 3-year high amid supply deficit forecast

Brent crude futures were up 70 cents, or 0.9%, at$84.70 a barrel at 1:28 p.m. EDT (1728 GMT). Front-month prices, which touched their highest level since October 2018 at $85.10, were headed for a weekly rise of 3%, which would be their sixth straight weekly gain.

US West Texas Intermediate (WTI) crude futures rose 80 cents, or 1.0%, to $82.11 a barrel. The contract is heading for a 3.5% gain on the week, putting it on track for an eighth consecutive weekly rise.

Demand has picked up with the recovery from the COVID-19 pandemic, with a further boost from power generators who have been turning away from expensive gas and coal to fuel oil and diesel.

Meanwhile, a sharp drop in oil stockpiles in the United States and the member countries of the Organisation of Economic Co-operation and Development is expected to keep global supply tight.

"It will take a trifecta of events to derail this oil price rally: OPEC+ unexpectedly boosts output, warm weather hits the Northern Hemisphere, and if the Biden administration taps the strategic petroleum reserves," said Edward Moya, senior market analyst at OANDA.

The International Energy Agency on Thursday said the energy crunch is expected to boost oil demand by 500,000 barrels per day (bpd).

That would result in a supply gap of around 700,000 bpd through the end of this year, until the Organization of the Petroleum Countries and allies, together called OPEC+, add more supply, as planned in January.

SOURCE: REUTERS