Brent crude oil prices have returned to $60 a barrel for the first time since January last year, before the coronavirus crisis took a toll on demand in the global economy.
The cost of crude for April delivery nudged $60.06 a barrel in the early hours of Monday during trading in Asia.
Market analysts cited several reasons for a surge in prices this year – a recovery that bears little resemblance to the state of the COVID-19 crisis that continues to cripple many economies globally.
Prices collapsed amid a meltdown for financial markets more broadly in February last year when it became clear the virus had spread to Europe and was set to result in massive disruption.
In the case of Brent crude there was a huge glut in supply versus demand and it fell below $20 last April to a 21-year low.
At the same time, in an unprecedented move, US oil costs actually fell into negative territory.
US West Texas Intermediate crude futures stood at $57.50 a barrel on Monday – their highest level for 13 months.
Experts said a weaker dollar was providing a boost to commodities priced in the US currency amid growing expectations of a new economic stimulus programme from president Joe Biden.
They also cited pledges of extra supply cuts by the world’s largest Brent producer, Saudi Arabia, due in February and March and backed by other members of the Organisation of the Petroleum Exporting Countries (Opec) and its allies, including Russia.
Ipek Ozkardeskaya, senior analyst at Swissquote, said China also offered an explanation for the price momentum.
She wrote: “Looking at the record number of supertanks at China’s ports, the rising Chinese demand could help explaining a part of the positive push in prices, and the backwardation.
“There are apparently 127 supertanks near Chinese ports, some 30% higher than the four-year average for this time of the year.”
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