Oil prices continue to rise as demand for oil increases

(Bloomberg) -- Oil prices extended a five-month surge on optimism about a recovery in demand as China successfully contained a virus outbreak.

U.S. oil futures rose 2.9 percent, with Brent crude above $71 a barrel. China has quickly reduced local cases of the virus to zero,  road traffic is showing signs of recovery. China also reopened the port of Ningbo, one of the world's busiest, after a two-week shutdown. "The developments in China have reignited expectations that oil demand will start to rise again," said Phil Flynn, senior market analyst at Price Futures Group Inc.

Meanwhile, a fire on an oil platform in Mexico has cut the country's oil production by more than 400,000 barrels a day, roughly equivalent to the amount Opec + will discuss filling the market when it meets next month.

The COVID-19 recovery has halted oil's rally  sparked speculation that Opec + may reassess its current plans to return more barrels to the market when it meets on September 1. However, Goldman Reiterated that the impact on oil demand  the Delta variant would be temporary, while UBS Group AG expects Brent to recover to $75 a barrel due to market strains.

This week's rebound coincided with a sharp strengthening of the period, suggesting rapid demand. In the past two days, the spread between the latest Two December Brent contracts has surged by $1 a barrel. The rise in the global benchmark pushed the premium to WTI to its highest level since April.

Price:

West Texas Intermediate for October delivery rose $1.90 to $67.54 a barrel in New York.

October Brent crude rose $2.30 to $71.05, breaching $71 for the first time since Aug. 12.

Later in the week, investors will also consider the Jackson Hole symposium, which actually began Thursday  could provide insight into how the Fed might scale back its stimulus program.

Despite the positive progress compared to the Delta variant, there are still obstacles to recovering demand. Chinese airlines are planning to operate the fewest flights in August since February, according to Cirium. In Malaysia, the rising infection threatens to exacerbate shortages of semiconductors  other components that have plagued automakers for months.

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Source: International Oil network