Oil prices hit highest levels in years as post-Covid demand continues recovery

Global crude prices surged to multi-year highs as more utilities turn away from expensive natural gas and coal to oil and diesel for power generation, while demand also continues to recover from the slump caused by –°ovid-19.

Brent oil futures rose about 1% to $85.73 per barrel by 09:00 GMT, the highest price since October 2018, while US West Texas Intermediate (WTI) crude futures climbed 1.4% to $83.40 per barrel, its highest since October 2014. Both contracts grew by nearly 3% last week.

The rally in oil prices reportedly comes as the latest shortages of natural gas and coal spread across Asia and Europe have triggered extra demand for oil products in power generation. Moreover, the world’s major economies began rebounding from the Covid-19 pandemic, creating a buoyant demand that caused a significant tightening of the market.

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“Easing restrictions around the world are likely to help the recovery in fuel consumption,” analysts from ANZ bank told Reuters.

“The jet fuel market was buoyed by news that the US will open its borders to vaccinated foreign travelers next month. Similar moves in Australia and across Asia followed.”

Gas-to-oil switching for power generation alone may reportedly boost demand by as much as 450,000 barrels per day in the fourth quarter.

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