After trading just below multi-year highs on Friday, crude oil prices edged higher last week. The pre-weekend rally extended into Monday and hit multi-year highs in intraday trading. The bullish sentiment due to tight global supply and increased fuel demand in the US and Asia supported the global benchmark oils.

December West Texas Intermediate (WTI) crude, the US benchmark, rose $1.26 a barrel and ended trading at $83.76 last week while Brent ICE futures December also rose 92 cents to $85.53 a barrel on Friday, reversing the previous daily decline.

This price reversal comes ahead of bearish reports that held back gains last Thursday. A report by the National Oceanic and Atmospheric Administration (NOAA) predicting a warmer winter in the US and falling coal and natural gas prices in China threatened the close. is likely to decrease in principle.

However, the continued decline in global inventories and the anticipation of supply tightening - exacerbated by the inability of some OPEC+ countries to raise output - have overshadowed concerns regarding the demand recovery.

WTI outperforms Brent as inventories are at their lowest in 3 years

Recent settlements suggest that WTI futures prices are effectively outperforming Brent futures prices, largely as a result of the marked tightening in the US market. Last week's inventory report showed commercial crude oil inventories in the US fell by about 400,000 barrels to 426.5 million barrels for the week ending Oct. 15. Crude stockpiles at the main storage hub. Cushing also fell to a three-year low.

At the same time, in a research report, Goldman Sachs said that the price of Brent crude oil could reach above $90 per barrel by the end of the year due to a strong recovery in global oil demand. The US investment bank earlier revised its year-end Brent crude oil price forecast from $80 per barrel to $90 per barrel.

Signs of recovery in demand in Asia

Forecasts that oil demand is on track to reach pre-Covid-19 levels have been bolstered after reports indicated that October crude oil imports in Asia were projected at a seven-month high. and back to pre-pandemic levels. Japan and South Korea's shift from coal to oil for power generation also led to a recovery in Asia's crude oil demand.

Prospects prosper, but turbulence with oil still exists

Most traders expect to see a bullish environment this week, helped by support from global coal and natural gas shortages ahead of winter. However, there are still potential difficulties for oil prices. The Covid-19 outbreak, along with new lockdowns, remains a major concern for demand. In China, widespread energy shortages, leading to cuts in energy output and distribution across industries, also remain a factor to watch closely.