Oil prices up to date rose on Monday, extending pre-weekend gains, with U.S. crude hitting a seven-year high as global supply remained tight amid strong demand worldwide as economies recover from coronavirus pandemic-induced slumps.
Brent crude futures settled 0.54% higher at $85.99 per barrel, following on from last Friday’s 1.1% gain. The contract was near a three-year high of $86.10, hit last Thursday.
U.S. West Texas Intermediate (WTI) crude futures settled flat at $83.76 per barrel, after climbing 1.5% on Friday. It touched its highest since October 2014 — $84.28 — earlier in the session.
“Bullish sentiment continues to support oil prices as global supply remains tight at a time when demand is recovering from the pandemic,” said Toshitaka Tazawa, an analyst at Fujitomi Securities.
“But immediate gains for the WTI’s nearest-term contract may be limited given steepening backwardation,” Tazawa said.
WTI futures contracts are currently in steep backwardation, meaning later-dated contracts trade are at a lower price than the current contract. Normally later months trade at a higher price, reflecting the costs of storing oil.