The prices of crude oil on Monday hit their highest multi-year, as demand recovers from the COVID-19 pandemic and high natural gas and coal prices enabling users to shift to fuel oil and diesel for power generation.
Brent crude oil futures went up 59 cents, or 0.7 per cent to $85.45 a barrel by 0900 GMT, after hitting $86.04, their highest level since October 2018.
While, U.S. West Texas Intermediate (WTI) crude futures rose 90 cents, or 1.1 per cent to $83.18 a barrel, after hitting $83.73, their highest since October 2014, Reuters reported.
Reuters quoted analysts at ANZ bank as saying “Easing restrictions around the world are likely to help the recovery in fuel consumption, noting that gas-to-oil switching for power generation alone could boost demand by as much as 450,000 barrels per day in the fourth quarter.”
The news agency also quoted a senior analyst at OANDA, Edward Moya, as saying “The oil market deficit seems poised to get worse as the energy crunch will intensify as the weather in the north has already started to get colder.”
“As coal, electricity, and natural gas shortages lead to additional demand for crude, it appears that won’t be accompanied by significantly extra barrels from OPEC+ or the U.S.,” Mr Moya said.
The shortages of natural gas and coal from Asia to Europe are causing more demand for oil products in power generation.
In September, China’s daily crude processing rate fell to the lowest since May 2020, as feedstock and environmental inspection crippled operations at refineries, while independent refiners faced tightening import quotas for crude oil, Aljazeera reported.