NEW YORK :Oil prices gained on Monday for a fifth straight day, with Brent at its highest since October 2018 and heading for US$80, as investors fretted about tighter supplies because of rising demand in parts of the world.
Brent crude was up US$1.44, or 1.8per cent, to settle at US$79.53 a barrel, having posted three straight weeks of gains. U.S. crude futures rose US$1.47, or 2per cent, to settle at US$75.45 a barrel, its highest since July, after rising for a fifth straight week.
Goldman Sachs raised by US$10 its year-end forecast for Brent crude to US$90 per barrel. Global supplies have tightened due to the fast recovery of fuel demand from the outbreak of the Delta variant of the coronavirus and Hurricane Ida's hit to U.S. production.
"While we have long held a bullish oil view, the current global supply-demand deficit is larger than we expected, with the recovery in global demand from the Delta impact even faster than our above-consensus forecast and with global supply remaining short of our below consensus forecasts," Goldman said.
Caught short by the demand rebound, members of the Organization of the Petroleum Exporting Countries and their allies, known as OPEC+, have had difficulty raising output as underinvestment or maintenance delays persist from the pandemic.
"The rise of oil prices is continuing beyond what even most bullish traders would dream just months ago, and Brent hurtling toward the threshold of US$80 per barrel is reflective of the extraordinarily tight crude market," said Louise Dickson, senior oil markets analyst at Rystad Energy.
"U.S. supply constraints will continue to provide upside to oil prices, as Ida-related outages will still affect U.S. supply in the first quarter of 2022."
Global oil demand is expected to reach pre-pandemic levels by early next year as the economy recovers, although spare refining capacity could weigh on the outlook, producers and traders said at an industry conference.
Global demand is seen rising to 100 million barrels per day by the end of 2021 or in the first quarter of 2022, Hess Corp President Greg Hill said. The world consumed 99.7 million bpd of oil in 2019, according to the IEA, before the COVID-19 pandemic hammered economic activities and fuel demand.
In India, oil imports hit a three-month peak in August, rebounding from nearly one-year lows touched in July, as refiners in the second-biggest importer of crude stocked up in anticipation of higher demand.
Abu Dhabi National Oil Company has planned to supply full volumes of all crude grades to term customers in Asia in December, several sources with knowledge of the matter said on Monday.
This will be the first time since the oil price crash in the second quarter of last year when the COVID-19 pandemic ravaged demand that ADNOC did not implement any supply cut, they said.
(Reporting by Stephanie Kelly; additional reporting by Noah Browning and Aaron Sheldrick; Editing by Louise Heavens, David Evans, David Gregorio and Mark Porter)