International oil prices have fallen from multi-year highs, but bulls are still supported by two forces

On Thursday (October 21), international oil prices retreated from multi-year highs as some investors profited from
the recent rally.
However, solid demand in the United States and the market's shift to oil-fired power generation amid soaring coal and natural gas prices limited the decline in oil prices
.

Satoru Yoshida, commodity analyst at Rakuten Securities, said: "We have seen some corrections, but the overall sentiment remains firm because neither the US nor OPEC has significantly increased production
.
Brent crude could reach $90 a barrel later this year as the global oil market is likely to remain tight, U.
S.
efforts to decarbonize will limit fossil fuel production increases, and demand will increase
as more power companies switch from coal and natural gas.
”

As supply tightens and crude prices rise, the Organization of the Petroleum Exporting Countries (OPEC) maintains a strategy of slowly increasing supply rather than ramping up efforts to free up more capacity
.
Refineries are ramping up production to meet synchronized demand growth in Asia, Europe and the United States, but plant maintenance overhauls and high natural gas prices are expected to limit supply
in the fourth quarter.

The oil market hit multi-year highs this week, also driven by soaring global coal and gas prices — prompting a shift to diesel and fuel oil power generation
.
The latest weekly US inventory data confirms strong demand
.

The U.
S
.
Energy Information Administration (EIA) said on Wednesday (Oct.
20) that crude inventories fell by 431,000 barrels to 426.
5 million barrels in the week ended Oct.
15, compared with an increase of 2 million barrels expected by survey analysts.
Crude inventories at the Cushing, Oklahoma, crude oil futures delivery center fell to their lowest level since October 2018, suggesting that market tensions may take some time to ease
.

U.
S.
gasoline inventories fell by 5.
368 million barrels last week, well above expectations of 950,000 barrels to 217.
7 million barrels, the lowest
since November 2019, the EIA said.
Distillate stocks, including diesel and heating oil, fell by 3.
913 million barrels, putting stocks at their lowest level
since April 2020.

Citi Research said in a research note: "Cushing's crude oil inventories have been significantly reduced, supporting the price and structure of U.
S.
crude oil flat, and NYMEX crude oil futures have risen above $0.
50 compared with the spot inverse spread
.
" The agency also pointed out that although many refineries stopped production and maintenance equipment in the autumn, the trend of increased demand has
arrived.

Alok Kumar, a senior official at India's power ministry, said on Thursday that India was considering maintaining strategic reserves of natural gas and imported coal to weather future supply shocks
.
The country is dealing with a severe coal shortage
.

EU leaders will discuss on Thursday how to deal with soaring energy prices, which has once again exposed old problems in the bloc over climate change targets and divergent
positions on whether an overhaul of the EU's energy market rules is needed.