Tight global supply and strengthening fuel demand in the United States and elsewhere led oil prices to extend gains to hit multi-year highs on Monday. Economies were recovering from pandemic-induced slumps.
Tamas Varga, oil analyst at London brokerage PVM Oil Associates said, it seems that continuous global stock drawdowns are still widely anticipated in coming months. Only a dent in demand growth could change the underlying sentiment, he said.
By 1105 GMT, Brent crude futures rose by 64 cents, or 0.8%, to $86.17 a barrel. It was a follow on from last Friday’s 1.1% gain. Earlier on Monday, they touched the highest price since October 2018 at $86.43.
After gaining 1.5% on Friday, U.S. West Texas Intermediate (WTI) crude futures rose 75 cents, or 0.9%, to $84.51 a barrel. They hit their highest since October 2014 earlier on Monday at $84.76.
Last week, both benchmarks closed with slight gains. That was despite rising numbers of COVID-19 cases in the United Kingdom and Eastern Europe.
A strong rebound in global oil demand could push Brent crude prices above its year-end forecast of $90 a barrel, Goldman Sachs (NYSE:GS) said. The bank forecast gas-to-oil switching could contribute at least 1 million barrels per day to oil demand.
Gasoline and distillate consumption is back in line with five-year averages in the United States, the world’s largest fuel consumer. That was after more than a year of depressed fuel demand.
Greenhouse Gas Emissions Hit Record
Meanwhile, on Monday, the U.N. weather agency said greenhouse gas concentrations hit a record last year. It said the world is way off track on climate goals, showing the scale of the task facing governments scrambling to prevent dangerous levels of warming.
Carbon dioxide levels surged to 413.2 parts per million last year, according to a report by the World Meteorological Organization. It was rising more than the average rate over the last decade, despite a temporary dip in emissions during COVID-19 lockdowns.
Secretary-General Petteri Taalas said that the current rate of increase in heat-trapping gases would result in temperature rises. That is “far in excess” of the 2015 Paris Agreement target of 1.5 degrees Celsius above the pre-industrial average this century.
He said they are way off track. They need to revisit their industrial, energy and transport systems and whole way of life, he said. He was calling for a dramatic increase in commitments at the COP26 conference beginning on Sunday.