Oil headed for a seventh weekly gain, the longest run since December, as a global energy crunch roiled markets from Europe to Asia.

Futures in New York extended gains in Asian trading toward $80 a barrel. Prices advanced 1.1% on Thursday after the U.S. Energy Department said that it had no plans “at this time” to tap the nation’s oil reserves. That followed remarks the day before from the energy secretary that releasing strategic stockpiles was being considered to counter surging gasoline prices.

Crude rallied to the highest since 2014 earlier this week after OPEC+ stuck with a gradual boost in supply next month despite a rapidly tightening market, in part due to the energy crisis. Russia’s offer to ease the gas crunch in Europe, and a Financial Times report that the U.S. would consider releasing reserves saw prices tumble more than 3% on Thursday before reversing those losses.

The economic recovery from the pandemic along with a supply disruption in the Gulf of Mexico following Hurricane Ida had already tightened the market before rising natural gas prices spurred additional demand for oil products like diesel and fuel oil. The squeeze, which is being exacerbated by higher coal prices, has come ahead of an expected increase in fuel consumption over winter.

“Stronger demand amid the energy crunch is still likely to be the main driver of prices for the time being,” said Daniel Hynes, senior commodity strategist at Australia and New Zealand Banking Group. “We expect inventories to continue to be drawn down, with a rebound in economic activity exacerbated by gas-to-oil switching leading into winter. That should push oil prices even higher.”

Prices

West Texas Intermediate for November delivery climbed 1.5% to $79.45 a barrel on the New York Mercantile Exchange at 7:25 a.m. in London after gaining 1.1% on Thursday.
Front-month prices are up 4.7% this week.
Brent for December settlement rose 1.4% to $83.07 on the ICE Futures Europe exchange after rising 1.1% on Thursday.
The prompt timespread for Brent was 69 cents in backwardation, compared with 78 cents at the start of the week.
While Russia is offering some form of respite to Europe with increased natural gas flows, China is still facing power outages and Beijing has ordered its state-owned firms to secure energy supplies for winter at all costs. Chinese fuel oil futures jumped almost 10% on Friday as local markets resumed after a week-long national holiday. The crisis, however, is providing a boost to some.

Indian refiners are cranking up operating rates toward full capacity thanks to a rebound in domestic consumption and the energy crunch, which is combining to stoke demand for diesel. Most state-owned companies now plan to run their refineries at near full capacity this month, according to people familiar.