Geoffrey Smith 

Investing.com — Crude oil prices hit $80 a barrel in the U.S. for the first time since 2014 on Friday, a day after the Energy Department played down reports that it was looking at selling barrels from the U.S. Strategic Petroleum Reserve.

The Department said on Thursday that is has “no plans to take action at this time” but appeared to leave the door open to the move, saying that “All tools in the tool box are always under consideration to protect the American people.”

Futures had fallen to their intraday low at 10:40 ET (1440 GMT) but were still 2.1% higher at $79.92 per barrel. Futures rose 1.6% to $83.32 per barrel. Futures on gasoline RBOB were at an all-time high of $83.32 a barrel, with 1.6% increase at $2.3715/gallon.

A U.S. labor market report earlier showed the market was not shaken. It indicated that the pace of job creation in the U.S. during the month to mid-September had been slower than predicted. Only 194,000 U.S. jobs were added in August, far less than the anticipated 500,000. August’s disappointing figure of 235,000 was, however, revised up by over 130,000.

It also chose not to confirm another rumor earlier in the week that suggested that it was considering the reintroduction the U.S. crude oil export ban to correct the balance of supply and demand. After being in effect since 1970’s oil shocks, the ban was lifted by Donald Trump.

While crude prices generally set the trend for other fuels in the global market, the situation is currently reversed, as shortages of and coal – especially in Asian markets – create a rare opportunity for oil-powered electricity generators.

U.S. gas prices are expected to rise by 49% for their eighth weekly increase. However, futures prices were 0.4% lower than their previous peak levels in early trading at $5.65 million Btu. Reuters said that LNG cargoes being delivered to Asia next month will be priced at $37 per mmBtu.

As the global wave of Deltavariant Covid-19 subsides, motor fuel demand continues to rise. This allows the reopening and expansion of major energy-consuming regions in the south and southeast Asia.

Rystad Energy analyst Louise Dickson noted that the market doesn’t need to be as tight as it is, given that OPEC and its allies still have more than 8.6 million barrels a day of crude oil output capacity lying idle.

“The group is seemingly basking in higher prices, at least in the very short-term, depriving the market of the only supply cushion that exists,” Dickson said in a note to clients. “OPEC+ controls 95% of global crude oil spare capacity and there simply aren’t other sources to tap into to bring more of an equilibrium to the market.”

Later Friday, Baker Hughes’ weekly will show how far U.S. companies are reacting to the price spike by increasing drilling. However, the group appears to enjoy higher prices for at least the near-term and is depriving markets of any supply cushion. OPEC+ controls 95% of global crude oil spare capacity and there simply aren’t other sources to tap into to bring more of an equilibrium to the market. The active rig count reached its highest level in 2 years, however it is only half of the peak recorded in 2018.