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Illustration: Sarah Grillo/Axios

Oil prices have continued to rise, gaining again on Tuesday after rising to the highest in two years on Monday.

Why it matters: Inflation worries and concerns that prices have run past reasonable valuations have weighed on equities recently, but bullish oil traders continue to be handsomely rewarded this year.

  • Prices for diesel (up 39.6% year to date), crude (36.6%) and gasoline (53.2%) have all delivered strong returns along with the stock prices for oil majors like ExxonMobil, Chevron and Occidental Petroleum.
  • The S&P 500 energy index has been by far the best performing of the index's 11 sectors, delivering a 43.5% YTD gain. (That's more than 15 percentage points better than the No. 2 sector, financials.)

The big picture: Rising oil prices have become a major concern for businesses and a common pain point listed by consumers, especially in recent weeks following the Colonial Pipeline hack that came in the face of already booming demand and rising prices.

  • Gasoline demand in the U.S. hit a new pandemic high last week, according to GasBuddy data released Sunday and national gas prices at $3.045 a gallon are the highest since October 2014, according to data from AAA.
  • 11,667 gas stations were without fuel as of Monday, Reuters' Stephanie Kelly reported.
  • U.S. crude exports fell last week to around 1.8 million barrels per day, their lowest since October 2018, while crude inventories declined 0.4 million barrels versus an expected 2.8 million barrel draw, according to weekly government data.
  • The number of total oil products supplied saw the biggest weekly decline and lowest weekly demand since January.

On the other side: Expectations continue to grow that demand will pick up, further adding to the supply/demand mismatch.

  • The Organization of the Petroleum Exporting Countries (OPEC) on Tuesday stuck to a forecast for a strong recovery in world oil demand in 2021, with growth in China and the United States outweighing the impact of the coronavirus crisis in India.
  • United Airlines announced it will add 400 daily flights to July for European destinations and plans to fly 80% of its U.S. schedule compared with July 2019. The airline also said that summer travel bookings rose 214% from 2020 levels.

What's next: Many hedge funds and money managers are betting oil prices have further to go and are packing into long oil and long commodity positions.

  • In a recent note to clients, Goldman Sachs asserted that it expects economic growth and easy monetary policy to help oil demand realize its biggest jump ever over the next six months, with prices hitting $80 a barrel this summer and commodities overall to rally by another 13.5% over the next six months.

Go deeper

So much for a "green transition": Carbon emissions from power sector soar

Data: EMBER; Chart: Axios Visuals

Global carbon dioxide emissions from the power sector have surged past pre-pandemic levels to reach new highs, a new report examining trends during the first half of 2021 finds.

Why it matters: The report from Ember, a London-based environmental think tank, shows that the energy transition that needs to happen to limit the severity and pace of global warming is not taking place fast enough.

WHO warns against travel bans on southern African countries

Matshidiso Moeti, World Health Organization regional director for Africa. Photo: Sylvain Gaboury/Patrick McMullan via Getty Images

The World Health Organization called on countries Sunday to not impose travel bans on southern African nations amid concerns over the new COVID-19 Omicron variant.

Why it matters: The U.S. and countries in Europe and the Asia-Pacific announced travel restrictions in response to Omicron, which was first detected in South Africa. It's since spread to several European countries, Canada, Israel, Australia and Hong Kong. The WHO noted in a statement that only two southern African nations have detected the new variant.

Updated 3 hours ago - Health

First North American Omicron cases identified in Canada

COVID-19 testing personnel at Toronto Pearson International Airport in September. Photo: Steve Russell/Toronto Star via Getty Images

The first two cases of the new Omicron variant have been detected in North America, the Canadian government announced Sunday evening.

Driving the news: The World Health Organization has named Omicron a "variant of concern," but cautioned earlier on Sunday that it is not yet clear whether it's more transmissible than other strains of COVID-19.