By Peter Nurse
Investing.com -- Oil prices surged Friday, climbing to new multi-year highs with top producers only gradually increasing global supply despite fuel demand increasing as economies recover from pandemic-induced slowdowns.
By 9:25 AM ET (1325 GMT), U.S. crude futures were up 1.6% at $85.05 a barrel, climbing above $85 for the first time since October 2014. Brent futures were up 1% at $85.50 a barrel, just short of its highest price since October 2018.
U.S. Gasoline RBOB Futures were up 1.6% at $2.4530 a gallon.
The price of oil has more than doubled over the past 12 months as the global economy rebounded from disruption caused by the Covid-19 pandemic, with mobility restrictions gradually being lifted. At the same time, the Organization of the Petroleum Exporting Countries and its allies, a group known as OPEC +, have been very cautious in adding supply to the global market after severely cutting output in the early stages of the pandemic.
Saudi Arabia Energy Minister Prince Abdulaziz bin Salman indicated on Bloomberg Television Monday that OPEC+ should maintain its cautious approach given the threat to demand still posed by the pandemic.
The rebound in global oil demand could push Brent crude oil prices above Goldman Sachs’ year-end forecast of $90 per barrel, the U.S. investment bank said in a research note over the weekend, helped by consumption rebounding in Asia after the recent delta-variant induced Covid-19 wave.
Oil prices have also been bolstered by worries about coal and gas shortages in China, India and Europe, which have spurred fuel-switching to diesel and fuel oil in the limited number of places where this is practical.
Adding to the positive tone, the number of U.S. oil and natural gas rigs was cut last week for the first time in seven weeks, energy services firm Baker Hughes said on Friday, suggesting that supply will remain limited in this important market.
Net long U.S. crude futures and options positions also increased in the week to Oct. 19, the U.S. Commodity Futures Trading Commission said on Friday, suggesting money managers remain confident about the market heading higher.