On Monday, oil prices increased, extending pre-weekend gains, with U.S. crude hitting a seven-year high as global supply remained tight amid robust demand as economies recovered from the coronavirus pandemic-induced slumps.

Brent crude futures gained 61 cents, or 0.7 percent, to $86.14 a barrel, following a 1.1 percent gain last Friday. Last Thursday, the contract hit a three-year high of $86.10.

After climbing 1.5 percent on Friday, US West Texas Intermediate (WTI) crude futures rose 70 cents, or 0.85 percent, to $84.47 a barrel. Earlier in the session, it hit $84.28, its highest level since October 2014.

"Bullish mood continues to underpin oil prices as global supply is tight at a time when demand is rebounding from the pandemic," said Fujitomi Securities analyst Toshitaka Tazawa.

“However, given steepening backwardation, immediate gains for the WTI's nearest-term contract may be limited,” Tazawa said.

The price of WTI futures contracts is currently in sharp backwardation, which means that later-dated contracts are trading at a lower price than the current contract. The costs of storing oil are usually higher in the later months of the year.

Worries about coal and gas shortages in China, India, and Europe have boosted oil costs, causing more people to switch to diesel and fuel oil for power.

Money managers increased their net long U.S. crude futures and options holdings in the week ending October 19, reflecting positive market sentiment, according to the US Commodity Futures Trading Commission (CFTC).

Saudi Arabia's crown prince stated over the weekend that the world's biggest oil exporter plans to achieve "net zero" greenhouse gas emissions by 2060, ten years later than the United States.

Meanwhile, despite rising oil prices, U.S. energy companies cut oil and natural gas rigs for the first time in seven weeks last week, according to Baker Hughes Co, an energy services firm.