TOKYO (Reuters) – Oil prices soared on Monday to their highest level in about 13 months, with fears of heightened tensions in the Middle East sparking new purchases, while hopes that a US stimulus and a easing blockages drive fuel demand and provide support.
Brent crude rose $ 1.09, or 1.8%, to $ 63.52 a barrel at 0428 GMT, after rising to a session high of $ 63.76, the highest since January 22, 2020.
US West Texas Intermediate (WTI) crude futures gained $ 1.28, or 2.2%, to $ 60.75 a barrel. It hit the highest level since January 8 last year at $ 60.95 at the start of the session.
Oil prices rose about 5% last week.
The Saudi-led coalition fighting in Yemen said on Sunday night that it intercepted and destroyed a drone loaded with explosives fired by the Iran-aligned Houthi group into the kingdom, state television reported, raising fears of new tensions in the Middle East.
“An initial spike in the oil markets was triggered by the news,” said Kazuhiko Saito, chief analyst at commodities brokerage Fujitomi Co.
“But the rally was also driven by growing hopes that a US stimulus and easing of the blockages will boost the economy and demand for fuel,” he said. WTI could be pulled back by profit-taking once it reached the key $ 60 level, he added.
US President Joe Biden pushed for the first major legislative achievement of his term on Friday, turning to a bipartisan group of local officials seeking help with his $ 1.9 trillion coronavirus relief plan.
Oil prices have also risen in recent weeks with supply tightening, largely due to production cuts by the Organization of Petroleum Exporting Countries (OPEC) and allied producers in the OPEC + group.
“In addition, robust global equity markets have increased investors’ risk appetite,” said Satoru Yoshida, commodities analyst at Rakuten Securities.
Asian stocks advanced to record levels on Monday, as successful coronavirus vaccine launches around the world raise hopes for a rapid economic recovery amid new Washington fiscal aid.
“With the supply of cheap money amid monetary easing around the world, rapid implantation of the vaccine and restricted supply from OPEC + and U.S. shale oil producers, crude oil prices may be heading towards $ 70 a barrel ”Said Yoshida.
Reporting by Yuka Obayashi; Richard Pullin’s Edition