Crude oil futures settled higher on Monday, extending recent gains amid expectations global energy demand will continue to rise following several countries easing travel restrictions.
Oil prices rose sharply last week after Saudi Arabia dismissed calls for additional OPEC+ supply and the International Energy Agency said surging natural gas prices could boost demand for oil among power generators.
Energy crisis in China and several parts of Europe sent coal prices soaring to record levels, pressuring power-generation companies and manufacturers to switch to using oil as the world economy reopens.
Traders also weighed the energy crunch in China, which is hurting factory output and also leading to power cuts in some areas. China’s power woes are likely to intensify due to rising coal prices.
Cold temperatures in the northern hemisphere are also expected to worsen an oil supply deficit.
Oil prices came off early highs after a report from the Federal Reserve showed an unexpected steep drop in industrial production in the month of September.
West Texas Intermediate Crude oil futures for November ended up by $0.16 or about 0.2% at $82.44 a barrel, after climbing to $83.87 a barrel, the highest level since October 2018.
Brent crude futures, which climbed to $86.03 a barrel, were down $0.69 or 0.8% at $84.17 a barrel a little while ago.
The Fed said industrial production tumbled by 1.3% in September following a revised 0.1% dip in August.
The sharp decline surprised economists, who had expected industrial production to edge up by 0.2% compared to the 0.4% increase originally reported for the previous month.