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The 'sky is the limit' for heating oil prices if we get slammed this winter: strategist

Yahoo! Finance logo Yahoo! Finance 10/11/2021 Brian Sozzi

Get those blankets and sweaters ready for the winter as one bad storm may send oil and natural gas prices soaring to new heights from already worrisome levels. 

"The sky is the limit," Natasha Kaneva, JPMorgan's head of global commodities strategy, told Yahoo Finance Live, referring to the outlook for heating oil prices, if the U.S. gets hit with a bad winter. "We are dealing with theoretical prices at this point because everything is already at record high levels. We just don't see the release valve. The only option is for demand destruction to start taking place. That's exactly the link with oil prices. Natural gas prices are so high that consumers are switching to other sources."

Kaneva added that natural gas prices could "double" from current levels if this winter is as bad as the one that impacted the flow of energy in Texas last year. 

"We cannot even put a price on the European natural gas prices at this point," Kaneva noted after a very volatile week for energy prices overseas.

With winter not even here yet, energy prices across the board have shot higher amid tight supplies during the global recovery from the pandemic. 

Oil prices are at seven-year highs. On Monday, Brent crude oil pushed higher to $84 a barrel — nearing the recent upwardly revised targets by some on the Street. 

Meanwhile, natural gas prices have more than doubled since June. 

Video: ‘Sky is the limit’ for heating oil prices amid global energy crunch (Yahoo! Finance)

Replay Video

The supply/demand imbalances in the energy markets has Kaneva's peers issuing similar worrisome comments.

"When you head into winter with critically low inventories, it has the potential to be a crisis," said Damien Courvalin, Goldman Sachs head of energy research, on Yahoo Finance Live. "It would take a cold winter to really face the risk of gas shortages."

Goldman recommends shares of ConocoPhillips and ExxonMobil as plays on rising energy prices. 

Brian Sozzi is an editor-at-large and anchor at Yahoo Finance. Follow Sozzi on Twitter @BrianSozzi and on LinkedIn.

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