Rising demand pushes oil to fresh multi-year peaks

The recent decision by OPEC and other major producers not to ramp up output has further strained global supplies.

World oil prices vaulted Monday to fresh multi-year pinnacles on strong demand and tight supplies, fueling inflation worries and weighing on most global stock markets.

The spike in energy prices saw West Texas Intermediate oil for delivery in November trading at $80.52 a barrel late Monday, its first time above $80 since October 2014, while London's Brent oil jumped to a three-year high at $84.59.

The recent decision by OPEC and other major producers not to ramp up output has further strained global supplies.

"Nerves are still clearly apparent in the markets," OANDA analyst Craig Erlam told AFP.

"The energy crisis is a major concern in the coming months, while inflation concerns and the prospect of tighter monetary policy are among the numerous economic headwinds," he said.

Noting there is "still plenty of momentum behind the oil rally," Erlam said it would not be a surprise to see oil back in the triple digits later this year.

All three major Wall Street indexes closed with losses after early gains evaporated, with the broad-based S&P 500 dropping 0.7 percent.

European bourses had a mixed session, Frankfurt ending flat while London and Paris ended just into the black.

Elsewhere, most Asian markets rose to extend last week's rally after US lawmakers averted a painful debt default.

Oil was also boosted last week by record-breaking natural gas prices, but these have eased after recent comments from Russian President Vladimir Putin.

Gas spiked last week on increasing demand from reopening economies ahead of the peak northern hemisphere winter, prompting some consumers to switch to crude oil.

What Schwab analysts called "the festering supply imbalance" for oil, added to inflation concerns and uncertainty ahead of US earnings season.

"I think this this pullback is not over yet," said Sam Stovall of CFRA Research. "I think investors are worried that third quarter earnings might not be as strong as was originally projected."

Attention this week will focus on US and Chinese inflation data, with surging prices across the world becoming increasingly problematic for governments as economies reopen and demand for goods returns as supplies remain constrained.