Oil prices rose early on Monday, extending Friday’s gains and hitting fresh multi-year highs, as the energy crisis in Europe and Asia continues to brighten the outlook for oil products to replace record-priced natural gas and coal.
As of 3:20 a.m. EDT on Monday, the prompt WTI Crude contract was up by 1.11% at $83.19. Earlier in the session, WTI Crude hit the highest level since October 2014 at $83.73.
The international benchmark, Brent Crude, traded at $85.46, up 0.73%. Earlier on Monday, Brent had briefly jumped above $86 per barrel at $86.04, which was the highest price since October 2018.
Oil extended gains from Friday, which wrapped up the eighth consecutive weekly gain for WTI Crude—the longest weekly winning streak since 2015. On Friday, Brent briefly topped $85 a barrel as energy markets continue to tighten ahead of the winter.
The rally continued early on Monday with the expectation of higher demand for oil products such as fuel oil and diesel to replace natural gas for power generation amid record-high gas prices in Europe and Asia.
“As the energy crisis stemming from severe natural gas shortages in Europe and a coal crunch in China enters its fourth week, worries over an oil supply shortfall for fuel replacement are snowballing,” Vanda Insights said in a note early on Monday.
Brent briefly hit $86 a barrel “due to a tight physical market,” ING strategists Warren Patterson and Wenyu Yao said on Monday.
“Over-compliance by the OPEC+ on output cuts have been helping crude oil supplies to remain tight,” the strategists said, noting that Bloomberg data showed the group pumped last month some 740,000 bpd of crude below the agreed production limit.
The rally on Monday was capped by some bearish Chinese data showing the lowest daily refinery throughput in 16 months amid a power crunch and feedstock shortage, and lower-than-expected economic growth in the third quarter.
By Tsvetana Paraskova for Oilprice.com
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Tsvetana is a writer for Oilprice.com with over a decade of experience writing for news outlets such as iNVEZZ and SeeNews. More