WTI hits highest level since October 2014 while Brent hits 3-year high
Oil prices rose on Monday. As economies recovered from the collapse caused by the coronavirus pandemic, the US and solid fuel demand pushed weekend gains to their highest levels in several years as global supply remained tight.
West Texas Intermediate (WTI) crude futures rose 62 cents, or 0.7%, to $84.38 a barrel at 0646 GMT after gaining 1.5% on Friday. Earlier in the session, it touched $84.76, its highest level since October 2014.
With tight supplies and strong fuel demand in the US, the tone of the oil market remained quite strong.
Brent crude futures rose 56 cents, or 0.7%, to $86.09 a barrel, after gaining 1.1% last Friday. The contract had previously reached its highest level since October 2018 at $86.43.
After more than a year of low fuel demand, gasoline and distillate consumption has returned to five-year averages in the United States, the world's largest fuel consumer.
According to Baker Hughes' report Friday said US energy firms stopped increasing oil and gas wells for the first time in seven weeks despite oil prices rose last week.
The U.S. Commodity Futures Trading Commission (CFTC) said on Friday that money managers increased their net long U.S. crude futures and options positions to Oct 19, underlining strong market sentiment.
Oil prices were also supported by concerns about coal and gas shortages in China, India and Europe. This has encouraged the shift to diesel and fuel oil as fuel for electricity generation.
However, analysts warn that there may be some corrections in the coming weeks as the sharp rise in crude oil prices has led to a heightened sense of caution.
As a matter of fact, the percentage increase WTI has achieved so far this year has reached levels from 2007 and 2009, when we saw a steep rally, which is somewhat exaggerated.
WTI futures contracts are currently in steep decline, meaning the later futures contract is trading at a lower price than the current contract. Normally subsequent months are traded at a higher price reflecting oil storage costs.
The bullish sentiment continues to support oil prices as global supply remains constrained, but immediate gains for WTI's nearest futures contract may be limited in anticipation of further pullback.
