Oil prices hit their highest in years as COVID-19 recovery and power producers fuel demand

File photo: A rig at the Al Howta oil field near Howta, Saudi Arabia.
Image Credit: AP

Singapore: Oil prices hit their highest level in years on Monday as demand continues to recover from the COVID-19 pandemic, spurred by a growing habit of power producers turning away from gas and coal expensive for fuel oil and diesel.

Brent crude oil futures rose 87 cents, or 1%, to $ 85.73 per barrel at 0111 GMT, the highest price since October 2018.

US West Texas Intermediate (WTI) crude futures rose $ 1.12, or 1.4%, to $ 83.40 per barrel, the highest since October 2014.

Both contracts rose at least 3% last week.

“The easing of restrictions around the world will likely help fuel the recovery,” analysts from ANZ Bank said in a note Monday.

“The jet fuel market has been boosted by the announcement that the United States will open its borders to foreign travelers with vaccines next month.

Similar movements in Australia and across Asia followed. They added that switching from gas to oil for power generation alone could increase demand by up to 450,000 barrels per day in the fourth quarter.

Nonetheless, supply could also increase from the United States, where energy companies added oil and gas rigs last week for a sixth straight week, as soaring crude prices prompted drillers to return. at the well.

The number of U.S. oil and gas rigs, an early indicator of future production, increased from 10 to 543 in the week to Oct. 15, its highest level since April 2020, the company said last week. Baker Hughes Co.

The Chinese economy, meanwhile, probably grew at the slowest pace in a year in the third quarter, affected by power shortages, bottlenecks and sporadic outbreaks of COVID-19.

The world’s second-largest oil consumer has issued a new batch of oil import quotas for independent refiners for 2021 that show total annual quotas were lower than last year, a first cut in import permits since these companies were allowed to enter the market in 2015.

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