NEW YORK: Oil prices rose on Monday, hitting their highest levels in more than two years, supported by economic recovery and the prospect of fuel demand growth as vaccination campaigns in developed countries accelerate.
Brent rose 34 cents to $73.03 a barrel by 12:56 p.m. EDT (1656 GMT). Earlier in the session, it reached $73.64 a barrel, its highest since April 2019.
US West Texas Intermediate rose 27 cents to $71.18 a barrel. It hit a session high of $71.78 a barrel, its highest since October 2018.
“The two leading crude markers are trading at (almost) two-and-a-half-year highs amid a potent bullish cocktail of demand optimism and OPEC+ supply cuts,” said Stephen Brennock of oil broker PVM.
“This backdrop of strengthening oil fundamentals have helped underpin heightened levels of trading activity.”
Motor vehicle traffic is returning to pre-pandemic levels in North America and much of Europe, and more planes are in the air as anti-coronavirus lockdowns and other restrictions are being eased, driving three weeks of increases for the oil benchmarks.
The mood was also buoyed by the G7 summit where the world’s wealthiest Western countries sought to project an image of cooperation on key issues such as recovery from the COVID-19 pandemic and the donation of 1 billion vaccine doses to poor nations.
The International Energy Agency said on Friday that it expected global demand to return to pre-pandemic levels at the end of 2022, more quickly than previously anticipated.
The IEA urged the Organization of the Petroleum Exporting Countries and allies, known as OPEC+, to increase output to meet the rising demand.
The OPEC+ group has been restraining production to support prices after the pandemic wiped out demand in 2020, maintaining strong compliance with agreed targets in May.
On the supply side, heavy maintenance seasons in Canada and the North Sea also helped prices stay high, said Rystad Energy analyst Louise Dickson.
“In June 2021, Rystad Energy estimates more than 330,000 barrels per day of oil and condensate supply is offline at Canada oil sands projects, and 370,000 bpd of supply offline in the North Sea,” Dickson said.
US oil rigs in operation rose by six to 365, the highest since April 2020, energy services company Baker Hughes Co said in its weekly report.
It was the biggest weekly increase of oil rigs in a month, as drilling companies sought to benefit from rising demand.