# Oil prices climb as COVID recovery, power generators stoke demand Author: Pal Sinha, Barnali Author URL: https://financedigest.com/author/pal-sinha-barnali Published: 2021-10-18 Category: BUSINESS Category URL: https://financedigest.com/category/business Meta Title: Oil Prices Surge to Highest Levels in Years as Demand Meta Description: Discover why oil prices are soaring to new heights amidst increasing demand and shifting energy trends. Stay informed on the latest market updates. URL: https://financedigest.com/oil-prices-climb-as-covid-recovery-power-generators-stoke-demandhtml ![undefined](https://prod.superblogcdn.com/site_cuid_cm5qst7v3003gwirgwqtxn8i8/images/2021-10-18t012328z1lynxmpeh9h018rtroptp4saudi-oil-freight-1736837552717-compressed.jpg) By Jessica Jaganathan SINGAPORE (Reuters) -Oil prices hit their highest level in years on Monday as demand recovers from the COVID-19 pandemic, boosted by more custom from power generators turning away from expensive gas and coal to fuel oil and diesel. Brent crude oil futures rose 90 cents, or 1.1%, to $85.76 a barrel by 0445 GMT, after hitting a session-high of $86.04, the highest price since October 2018. U.S. West Texas Intermediate (WTI) crude futures climbed $1.23, or 1.5%, to $83.51 a barrel, after hitting a session-high of $83.73, highest since October 2014. Both contracts rose by at [least 3% last week](https://www.financedigest.com/80-of-brits-admit-to-feeling-hangry-at-least-once-a-week.html "80% of Brits admit to feeling “hangry” AT LEAST once a week"). [“Easing restrictions around the world are likely to help the recovery](https://www.financedigest.com/europe-sees-travel-recovery-as-covid-restrictions-ease.html "Europe sees travel recovery as COVID restrictions ease") in fuel consumption,” analysts from ANZ bank said in a note on Monday, adding that gas-to-oil switching for power generation alone could boost demand by as much as 450,000 barrels per day in the fourth quarter. Cold temperatures in the northern hemisphere are also expected to worsen an [oil supply](https://www.financedigest.com/oil-prices-rise-as-china-eases-covid-curbs-u-s-storm-fuels-supply-worries.html "Oil prices rise as China eases COVID curbs, U.S. storm fuels supply worries") deficit, said Edward Moya, senior analyst at OANDA. The oil market deficit seems poised to get worse as the [energy crunch](https://www.financedigest.com/belgium-supports-energy-price-caps-suspending-trading-in-eu-power-crunch.html "Belgium supports energy price caps, suspending trading in EU power crunch") will intensify as the weather in the north has already started to get colder,” he said. As coal, electricity, and natural [gas shortages lead to additional demand](https://www.financedigest.com/demand-for-automotive-gas-charged-shock-absorbers-market-to-be-fuelled-by-rapid-shift-in-consumer-perception-and-increasing-awareness.html "Demand for Automotive Gas Charged Shock Absorbers Market to be Fuelled by Rapid Shift in Consumer Perception and Increasing Awareness") for crude, it appears that won’t be accompanied by significantly extra barrels from OPEC+ or the U.S.,” he added. Japanese Prime Minister Fumio Kishida said on Monday that the country will urge [oil producers to increase output](https://www.financedigest.com/uk-oil-gas-firms-to-leave-years-worth-of-output-in-ground-with-tax-hikes-report.html "UK oil, gas firms to leave year’s worth of output in ground with tax hikes-report") and take steps to cushion the blow to industries hit by the recent spike in energy costs. Still, supply could increase from the United States, where [energy firms](https://www.financedigest.com/varo-energy-buys-80-of-dutch-biogas-firm-aims-to-double-capacity-by-2026.html "Varo Energy buys 80% of Dutch biogas firm; aims to double capacity by 2026") last week added oil and natural gas rigs for a sixth week in a row as soaring crude prices prompted drillers to return to the wellpad. The U.S. oil and gas rig count, an [early indicator of future output](https://www.financedigest.com/french-sugar-makers-to-start-output-early-as-energy-curbs-loom.html "French sugar makers to start output early as energy curbs loom"), rose 10 to 543 in the week to Oct. 15, its highest since April 2020, [energy services firm Baker](https://www.financedigest.com/french-energy-suppliers-will-let-struggling-bakers-renegotiate-contracts-le-maire.html "French energy suppliers will let struggling bakers renegotiate contracts – Le Maire") Hughes Co said last week. China’s economy, meanwhile, likely grew at the slowest pace in a year in the [third quarter](https://www.financedigest.com/greek-residential-property-price-recovery-picks-up-in-third-quarter.html "Greek residential property price recovery picks up in third quarter"), hurt by power shortages, supply bottlenecks and sporadic COVID-19 outbreaks. Daily [crude processing rate fell to the lowest since May 2020 in September in the world’s second-largest oil](https://www.financedigest.com/oil-prices-dip-on-u-s-crude-reserve-release-inflation-pressure.html "Oil prices dip on U.S. crude reserve release, inflation pressure") consumer, as feedstock shortage and environmental inspection crippled operations at refineries, while independent refiners faced tightening import quotas for crude oil. (Reporting by Jessica Jaganathan; Editing by Kenneth Maxwell and Stephen Coates) --- This blog is powered by Superblog. Visit https://superblog.ai to know more. ---