Oil Prices Climb as COVID Recovery, Power Generators Stoke Demand

Oil Prices Climb as COVID Recovery, Power Generators Stoke Demand

General view of Saudi Aramco's Ras Tanura oil refinery and oil terminal in Saudi Arabia May 21, 2018. REUTERS/Ahmed Jadallah

Oil prices hit their highest level in years on Monday as demand recovers from the COVID-19 pandemic, boosted by more custom from power generators turning away from expensive gas and coal to fuel oil and diesel.

Brent crude oil futures rose 63 cents, or 0.7%, to $85.49 a barrel by 0645 GMT, after hitting a session-high of $86.04, the highest price since October 2018.

US West Texas Intermediate (WTI) crude futures climbed 95 cents, or 1.2%, to $83.23 a barrel, after hitting a session-high of $83.73, highest since October 2014.

Both contracts rose by at least 3% last week.

"Easing restrictions around the world are likely to help the recovery in fuel consumption," analysts from ANZ bank said in a note on Monday, adding that gas-to-oil witching for power generation alone could boost demand by as much as 450,000 barrels per day in the fourth quarter.

Cold temperatures in the northern hemisphere are also expected to worsen an oil supply deficit, said Edward Moya, senior analyst at OANDA.

"The oil market deficit seems poised to get worse as the energy crunch will intensify as the weather