Jessica Jaganathan

SINGAPORE (Reuters – Monday’s oil prices reached their highest levels in many years as the demand for crude continues to recover from the COVID-19 Pandemic. The increase in custom has been fueled by power generators switching away from coal and expensive gas, and turning towards fuel oil like diesel.

The futures price rose 87 cents (or 1%) to $85.73/barrel by 0111 GMT. It was the highest level since October 2018.

U.S. West Texas Intermediate Crude Futures (WTI), rose 1.4% or $1.12 to $83.40/barrel, their highest point since October 2014.

Last week, both contracts increased by at least 3 percent.

In a Monday note, analysts at ANZ bank stated that “easing restriction around the globe are likely to aid the recovery in fuel use.”

The news that the United States will allow foreign travelers to get vaccinated next month buoyed the jet fuel market. Similar actions were made in Australia, and elsewhere across Asia.

The researchers added that the gas-to oil switching in power generation could increase demand by up to 450,000 barrels daily during the fourth quarter.

However, there is also the possibility of increased supply from the United States. Energy firms added oil and other rigs last week for the sixth straight week as high crude prices forced drillers back to the wellpad.

Baker Hughes Co, an energy services company, said that the U.S. oil-and gas rig count was an indicator of future production and rose to 10 to 543 during the week to October 15. This is its highest level since April 2020.

China’s economy experienced the lowest growth rate in one year, growing at a slow pace in the third quarter. It was affected by supply bottlenecks, power shortages and COVID-19 sporadic outbreaks.

A new set of oil import restrictions for independent refiners was issued by the second largest oil consumer in the world. They show lower total oil import allowances than last year. It is also the first time that import permits have been reduced since 2015, when these companies were permitted to enter into international markets.