In the US, analysts surveyed by Bloomberg estimate a crude stockpile rise of 700,000 barrels last week. Image Credit: Bloomberg

Dubai: Oil extended its rally from a seven-year high a day after OPEC+’s decision to keep its supply agreement in place as energy prices spike stoking concerns that more petroleum products will be used in power generation. US crude futures advanced 1.7 per cent on Tuesday, heading closer to the key, psychological $80-a-barrel level.

At an OPEC+ meeting on Monday, Saudi Arabia and its partners opted for only a modest output increase of 400,000 barrels a day for November. US natural gas futures jumped to a 12-year high global as global shortages of that fuel fanned fears of a shortage in the US ahead of winter in the northern hemisphere.

“There is no room for error in the system,” said Phil Flynn, senior market analyst at Price Futures Group Inc. “If we get a cold winter these prices could go up dramatically.”

Meanwhile, the industry-funded American Petroleum Institute reported US crude stockpiles rose 951,000 barrels last week, according to people familiar with the data.

Both the US and global crude benchmarks have surged this month with rising energy prices stoking fear of inflation forcing consumers to pay more for everything from gasoline to heating, food and plastics.

Winter demand

Goldman Sachs Group forecast that power generation could add an extra 650,000 barrels a day to oil demand this winter due to high gas prices.

Underlying oil market gauges are also showing signs of strength. West Texas Intermediate crude’s so-called Dec.-Red-Dec. spread, a favored trade of the world’s hedge funds, topped $7.50 a barrel this week, the strongest on a rolling basis since 2019.