TOKYO (REUTERS) - Oil prices climbed on Monday (Oct 25), extending pre-weekend gains to hit multi-year highs as global supply remained tight amid solid demand as economies pick up from pandemic-induced slumps.
US West Texas Intermediate (WTI) crude futures rose 62 cents, or 0.7 per cent, to US$84.38 a barrel at 0646 GMT, after gaining 1.5 per cent last Friday. They touched their highest since October 2014 - US$84.76 - earlier in the session.
Brent crude futures increased 56 cents, or 0.7 per cent, to US$86.09 a barrel, following on from last Friday's 1.1 per cent gain. The contract earlier hit its highest since October 2018 of US$86.43.
"With firm fuel demand in the United States amid tight supply, oil market's tone stayed fairly strong, which prompted some speculators to unwind short positions," said Mr Tetsu Emori, chief executive officer of Emori Fund Management.
After more than a year of depressed fuel demand, gasoline and distillate consumption is back in line with five-year averages in the US, the world's largest fuel consumer.
Meanwhile, US energy firms last week cut oil and natural gas rigs for the first time in seven weeks even as oil prices rose, energy services firm Baker Hughes said in its closely followed report last Friday.
Money managers raised their net long US crude futures and options positions in the week to Oct 19, the US Commodity Futures Trading Commission (CFTC) said last Friday, underlining strong market sentiment.
Oil prices have also been bolstered by worries about coal and gas shortages in China, India and Europe, which spurred fuel-switching to diesel and fuel oil for power.
But analysts warn there may be some corrections in the coming weeks as the sharp rise in crude prices has led to a growing sense of caution.
"WTI's percentage gain so far this year has reached the levels in 2007 and 2009 when we also saw a steep rally, suggesting it's a bit overdone," Mr Emori said.