(Bloomberg) — 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. 

Futures moved 1.7% higher Tuesday and are now closer to the $80-a-barrel psychological level. Saudi Arabia, along with its partners at OPEC+ on Monday, favored a small increase in output of 400,000 barrels per hour for November. As global fuel shortages exacerbated concerns about the U.S., the U.S. saw its output rise to 12 year high. 

“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.”

According to those familiar with the information, American Petroleum Institute, an industry-funded institute, reported that crude oil stocks in the United States rose by 951,000 barrels last Week. 

The U.S. crude benchmarks and the global crude benchmarks both soared in this month’s market. Rising energy prices have stoked fear about inflation, forcing consumers to spend more on everything: gasoline, heating and food. 

Goldman Sachs Group Inc (NYSE:). High gas prices could cause power generation to add 650,000 more barrels per day to the oil demand for this winter.

Oil market gauges that are not directly affected by oil prices show 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. 

Bloomberg surveyed analysts in America and estimated that the crude stockpile rose by 700,000. On Tuesday, the industry-funded American Petroleum Institute (API) will publish inventory data. The U.S. government’s weekly total will be released on Wednesday.

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