Crude oil prices have rallied in recent times with Brent futures hovering near a three-year high of $84 per barrel. Global recovery in demand for energy amid limited supply and a power crunch is behind the surge primarily. Analysts say the demand is likely to rise further as economies make a comeback from the fallout from the pandemic with a steady rise in vaccinations.

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The global benchmark is up 61.5 percent so far in 2021 in a broader rebound from pandemic lows.

Let's take a look at how Brent and West Texas Intermediate (WTI) prices have moved in the past year:

So what is driving crude oil prices now?

Top producers raising output but moderately

Post-pandemic demand rising sharply

Rising ask from overall energy complex amid power crisis

US production recovering from disruptions caused by hurricanes (Nicholas and Ida)

Most analysts agree that the worst seems to be over for the oil market with regard to the damage caused by the coronavirus. They see prices continue to rise going forward despite bouts of correction.

ALSO READ: Brent likely to test 2018 highs, says Probis Securities

Manoj Kumar Jain, Director-Head of Commodity Research at Prithvi Finmart, said rising post-COVID demand and the power crunch in several countries will likely continue to support oil prices.

Post-COVID demand boom

Some see more than economic revival or easing of COVID-related restrictions behind the big leap in oil prices.

"If we see, the whole situation could be attributed to the post-pandemic boom. There is no doubt that demand has improved as restrictions have been eased, business activities gearing up and economies witnessing a recovery amid central banks’ monetary support and vaccination drives. But supply has been hit due to restrictions and logistical constraints amid the pandemic," Sugandha Sachdeva, VP-Commodity and Currency Research, told CNBCTV18.com.

"The shortage of gas and coal has led to a power crisis, which is spreading from Europe to Asia now. As European gas prices have reached record highs, oil demand is soaring as an alternate option to switch to for power generation," she explained.

ALSO READ: Expect Brent to touch $86 per barrel in a couple of weeks, says XM Australia’s Peter McGuire

Power prices have surged to record levels in the recent past amid shortages in Asia, Europe and the US.

"Major oil producers are restraining to boost significant supplies in the market to cool down prices, despite pressure from some large consumers. A major reason for this could be that the producers are looking to offset COVID-caused losses with the current scenario, where prices are skyrocketing with rising demand that would benefit oil-backed economies," said Sachdeva.

The OPEC Plus grouping of top producers is increasing production to address the rising demand. This is part of a broader move to remove curbs put in place to support prices by addressing oversupply.

Hareesh V, Head of Commodity Research at Geojit Financial Services, sees the supply crunch from top producers as the sole reason behind the spike in oil prices. High natural gas and coal prices amid an expected rise in winter season demand are also responsible for the surge, he said.

ALSO READ: Rupee reacting to crude, RBI may hold it at around 75 vs dollar, says ICICI Securities

Crude oil to touch $100 mark?

Ajay Kedia, Founder and Director of Kedia Commodity Comtrade, sees low chances of crude oil returning to $100 a barrel mark anytime soon. Unless the OPEC Plus grouping raises output with immediate effect, crude prices are expected to stay elevated, he told CNBCTV18.com.

"Crude oil may rise to $90-92 per barrel levels in the coming months. Weakness in the rupee against the US dollar is going to continue to support MCX crude futures," said Kedia, who recommends a buy-on-dips strategy on domestic crude futures for a target of Rs 6,600 in the near term.

Sachdeva said the overall trend is likely to remain positive for oil in the next year.

She expects a 25-30 percent upside in Brent given the supply bottlenecks, demand revival, gas-to-oil switching and speculative sentiments. Brent could march towards the $110/barrel level by next year "though it may not be a one-way ride with dips and corrections".

Jain's most optimistic view is that WTI crude could test $78-80 a barrel levels by end of 2021, and most pessimistic that it could correct to $70 a barrel again.

(Edited by : Abhishek Jha)