Growing energy demand fuels oil rise

Tokyo — Oil prices rose on Monday, extending multiweek gains, amid supply restraint from major producers and growing demand for fuels as economies try to recover from the coronavirus pandemic.

Brent crude was up 81c, or 1%, at $83.20 a barrel by 4.12am, after gaining almost 4% last week. US oil was up $1.15, or 1.5%, at $80.50 a barrel, the highest since late 2014. US crude rose 4.6% from Friday.

Prices have risen as more vaccinated populations are brought out of lockdowns and fuel economic activity, with Brent advancing for five weeks and US crude for seven.

Coal and gas prices have also been surging as economies recover, making oil more attractive as a fuel for power generation, pushing crude markets higher.

But with inventories in the US starting to increase again after recent drawdowns, oil prices may start to falter.

“We think crude prices will struggle to climb much higher this quarter and still forecast them to gradually drop next year,” Caroline Bain, chief commodities economist at Capital Economics, said in a note.

US crude inventories rose for a second consecutive reporting period last week as more production returned after extended shut-ins due to hurricanes.

Opec and allies, together called Opec+, last week decided to maintain a steady and gradual increase in production.