Oil prices reached their highest level in years on Monday as demand recovered from the Covid-19 pandemic, helped by power producers abandoning expensive gas and coal in favour of fuel oil and diesel.

WTI crude futures (West Texas Intermediate, US) rose 26 cents, or 0.3 per cent, to $82.54 a barrel after hitting a session high of $83.73, the highest level since October 2014.

Brent crude futures reversed early gains and fell 12 cents, or 0.14%, to $84.75 a barrel after hitting a session high of $86.04, the highest price since October 2018.

Both contracts were up at least 3% last week, Exness Broker noted.

"Reduced restrictions around the world are likely to help restore fuel consumption," ANZ Bank analysts said in a note on Monday, adding that a switch from gas to oil alone for power generation could boost demand by 450,000 barrels a year. day in the fourth quarter.

Low temperatures in the northern hemisphere are also expected to exacerbate oil supply shortages, said Edward Moya, senior analyst at OANDA.

"The oil market deficit looks set to worsen as the energy crisis intensifies as the weather in the north has already started to cool," he said.

"As shortages of coal, electricity and natural gas lead to additional demand for crude oil, it looks like this will not be accompanied by significant additional barrels from OPEC or the US," he added.

Japanese Prime Minister Fumio Kishida said on Monday that the country would urge oil producers to increase production and take measures to soften the blow to industries hit by the recent spike in energy prices.

Nevertheless, supply may increase from the United States, where energy companies last week added oil and natural gas rigs for a sixth straight week as soaring crude prices prompted drillers to return to the site.

The number of oil and gas rigs in the US, an early indicator of future production, rose 10 to 543 in the week to October 15, the highest since April 2020, energy company Baker Hughes Co said last week.

Meanwhile, China's economy probably grew at its slowest pace in a year in the third quarter, hit by power shortages, supply bottlenecks and sporadic Covid-19 outbreaks.

Daily refining rates fell to their lowest level since May 2020 in September at the world's second-largest oil consumer as feedstock shortages and environmental inspections crippled refinery operations, while independent refiners faced tighter crude import quotas.