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Oil Hits 7-Year High As OPEC Maintains Output Plans Despite Energy Crunch

OPEC leaders, along with non-member allies such as Russia, agreed to stick to previous production increases despite soaring prices linked to a global energy crunch.

Global oil prices hit a fresh seven-year high Monday after OPEC stuck to its previous plans for a small increase in production even as a rolling energy crisis in China continues to boost commodities in major markets around the world.

OPEC members, meeting virtually in Vienna, agreed to "reconfirm the production adjustment plan", a long-time pact that is taking some 1.5 million of barrels from the market each day, by just 400,000 barrels a day, a move that will do little to clam a year-to-date gain of around 50% for global crude prices.

"The current energy crunch in global coal and gas prices may boost oil demand by 500,000 barrels a day this winter due to substitution demand for diesel, propane and gas oil," said Saxo Bank's chief commodity strategist Ole Hansen. 

WTI futures for November delivery traded $1.96 higher to start the week at $77.84 per barrel while Brent contracts for December, the global pricing benchmark, were up $2.16 at $81.46 per barrel, the highest since 2014.

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Natural Gas prices were also on the move, with futures prices for October 26 delivery trading near the highest level in more than seven years at $5.96 per million British thermal units.

Tighter emissions standards and a reported lack of coal supplies have triggered factory shutdowns in China's industrial northeast, an ongoing surge in natural gas prices in Europe -- which are up more than 500% over the past year -- and historically low levels of U.S. crude inventory could both challenge the region's post-pandemic recovery and the Federal Reserve's 'transitory' stance on inflation risks.