Oil prices fell on Thursday as a forecast for a warm winter in the United States put a halt to a rally that had sent prices to a three-year high above $86 a barrel early in the day due to restricted supply and a worldwide energy shortage. According to a National Oceanic and Atmospheric Administration report released Thursday morning, winter weather in much of the United States is predicted to be warmer than typical.
“The report, indicating drier and warmer conditions across the southern and eastern U.S., is putting pressure on the complex,” said Bob Yawger, director of energy futures at Mizuho. Brent crude slipped $1.21 to $84.61 per barrel after hitting a session high of $86.10, the highest level since October 2018. The price of West Texas Intermediate crude in the United States fell 92 cents to $82.50.
On Wednesday, the U.S. Energy Information Administration reported leaner crude and fuel stockpiles, with crude supplies at the Cushing, Oklahoma storage hub falling to a three-year low. Traders who had established a selling barrier of $86 took advantage of the opportunity to make a profit. As a result, Oil prices plummeted. Brent’s price has increased by more than 60% this year, owing to a delayed ramp-up in supply by the Organization of Petroleum Exporting Countries and Allies (OPEC+) and a global coal and gas shortage that has forced power generators to turn to oil.
A decline in coal and natural gas prices also put pressure on oil. Coal slumped 11% in China this week, extending losses since Beijing hinted at intervening to temper the market. However, OPEC+ is expected to continue to moderate output increases, while demand is projected to return to pre-pandemic levels, according to some analysts.