By Aaron Sheldrick

TOKYO (Reuters – Oil prices rose Monday amid higher oil prices and supply constraints from major producers. This is despite growing fuel demand as the economies recover from the coronavirus outbreak.

The price of oil rose 81 cents (or 1%) to $83.20/barrel by 0212 GMT. This was after it gained almost 4% over the past week. U.S. oil rose 4.6% from Friday to $80.50, an increase of $1.15 or 1.5%.

As more people are vaccinated, prices have increased. Brent has advanced for five weeks while U.S. crude oil for seven.

As economies recover, gas and coal prices are also rising, which makes oil more appealing as a fuel source for power generation. This has driven crude markets higher.

However, with U.S. inventories starting to increase after recent drawdowns oil prices might start to drop.

Caroline Bain (chief commodities economist, Capital Economics), stated in a note that “we think crude oil prices will struggle to rise much higher this quarter” and continued to forecast them falling gradually next year.

U.S. crude inventory rose last week for the second time in a row, as more production was able to return after hurricane-related extended shutdowns. [EIA/S]

Last week, the Organization of the Petroleum Exporting Countries and its allies (OPEC+) decided to continue a gradual and steady increase in oil production.