Oil price inches closer to $80 per barrel in 3-year high

Oil prices rose for a fifth straight day on Monday, with Brent at its highest since October 2018 and heading for $80. The price increase comes in the middle of supply concerns as demand picks up in parts of the world with the easing of pandemic restrictions.

Brent crude was up 92 cents (1.2%) at $79.01 a barrel at 1100 GMT, having posted three straight weeks of gains. U.S. Oil was up 82 cents (1.1%) to $74.80, near its highest since July, after rising for a fifth straight week last week.

Goldman Sachs raised its year-end Brent crude forecast by $10 to $90 per barrel, as faster fuel demand recovery from the outbreak of the Delta variant of the coronavirus and Hurricane Ida’s hit to U.S. production has led to tight global supplies.

“While we have long held a bullish oil view, the current global supply-demand deficit is larger than we expected, with the recovery in global demand from the Delta impact even faster than our above-consensus forecast and with global supply remaining short of our below consensus forecasts,” Goldman said.

Caught short by the demand rebound, members of the Organisation of the Petroleum Exporting Countries and their allies (OPEC+) have had difficulty raising output as under-investment or maintenance delays persist from the pandemic.

“Price support came courtesy of U.S. supply tightness as disruptions in the Gulf of Mexico spurred inventory draws,” said Stephen Brennock of oil broker PVM.

Gains across the broader energy complex also buoyed the European crude benchmark.

“Surging natural gas prices fuelled rumours that it could boost demand for alternative fuels, including oil,” Goldman added.

India’s oil imports hit a three-month peak in August, rebounding from nearly one-year lows touched in July, as refiners in the second-biggest importer of crude stocked up in anticipation of higher demand.