ASX 200 energy shares opened firmer on Monday as oil prices continued to rally to multi-year highs.
Western Texas Intermediate is currently trading 56 cents higher, or 0.68%, at a 7-year high of US$83.03 a barrel.
Similarly, the global benchmark, Brent Crude, is up 38 cents, or 0.45%, to US$85.27 a barrel.
Just 12 months ago, both oil prices were sitting at around US$40 a barrel.
A solid start to the week for ASX 200 energy shares
The S&P/ASX Energy (INDEXASX: XEJ) is currently the best performing sector this morning, up 0.96%.
The largest oil and gas player, Woodside Petroleum Limited (ASX: WPL) is currently up 0.36% at $25.27.
The Oil Search Ltd (ASX: OSH) share price is currently up 0.88% at $4.56.
Similarly, Santos Ltd (ASX: STO) is also trading 0.89% higher at $7.41.
Meanwhile, Beach Energy Ltd (ASX: BPT) is leading the gains, up 2.94% at $1.48.
What’s next for oil prices?
Positive demand and supply factors have helped drive a sustained push in oil prices.
Analysts believe that oil prices could continue to trend higher amid a recovery in global energy demand.
“Crude prices are rallying after another round of strong earnings and economic data suggests the economy can still handle the current surge in energy prices,” said OANDA senior market analyst Ed Moya, according to S&P Global.
“It will take a trifecta of events to derail this oil price rally: OPEC+ unexpectedly boosts output, warm weather hits the northern hemisphere, and if the Biden administration taps the strategic petroleum reserves,” Moya added.
Analysts at TD Securities also flagged the sharp increase in natural gas and coal prices as another tailwind for crude oil demand.
Gas to oil switching is “particularly fuelling upside momentum in Brent Crude and heating oil, which can be exacerbated by up to 1 million [barrels a day] of incremental winter demand.”
Despite oil prices sitting at multi-year highs, most ASX 200 energy shares remain well below pre-COVID levels.