Oil markets climbed for a sixth day on Tuesday, boosted by a tighter supply and firm demand outlook, but power shortages in China which hit factory output tempered the rally.
Brent crude futures gained 67 cents, or 0.8%, to $80.20 a barrel at 1016 GMT, after reaching their highest level since October 2018 at $80.75. Brent gained 1.8% on Monday.
U.S. West Texas Intermediate (WTI) crude futures rose 79 cents, or 1%, to $76.24 a barrel, after hitting a session high of $76.67, its highest since early July. It jumped 2% the previous day.
Hurricanes Ida and Nicholas, which swept through the U.S. Gulf of Mexico in August and September, damaged platforms, pipelines and processing hubs, shutting most offshore production for weeks.
Also weighing on supply, top African oil exporters Nigeria and Angola will struggle to boost output to their quotas set by the Organization of the Petroleum Exporting Countries (OPEC) until at least next year due to underinvestment and maintenance problems, sources at their respective oil firms warn.
Their battle mirrors that of several other members of the OPEC+ group of producers which have been curbing production to support prices but are now failing to ramp up output to meet recovering demand.
“Oil markets are accelerating, as a persistent supply deficit is shrinking the inventory cover to the lowest level in decades,” Barclays said in a note.
The bank raised its 2022 Brent and WTI price forecasts to £77 and $74 a barrel, respectively.
Morgan Stanley sees Brent trading at $77.5 a barrel in the third quarter under a base case and at $85 in a bull case.
Prices are facing headwinds, however, from a power crunch in the world’s biggest energy consumer.
“Recent power rationing to industries in China to drive down emissions could weigh on economic activity, potentially offsetting the tailwind from incremental diesel use in power generation,” Barclays said.