Oil prices extended their rally on Wednesday on growing expectations for demand as the global economy recovers, though equity investors trod a more cautious line as inflation fears continue to cast a shadow over trading floors.

While some countries are struggling in their battle with the coronavirus, the general mood among dealers is upbeat that the global economy is rebounding sufficiently strongly as vaccines are rolled out and parts of the planet slowly return to a semblance of normality.

And one of the biggest beneficiaries of that is the crude market, with demand for the commodity picking up as people begin travelling again and factories restart.

Both main contracts have rocketed from the dark days of last April — when they crashed in reaction to the imposition of lockdowns around the world to contain the pandemic — helped by top producers slashing output.

But with the world recovery now on track, the 23 oil-rich nations of the so-called OPEC+ group, are now confident that demand will increase enough for them to open the taps further.

“The demand picture has shown clear signs of improvement,” said Saudi Energy Minister Prince Abdulaziz bin Salman. And Russian Deputy Prime Minister Alexander Novak said: “We see that demand has increased, that prices have stabilised,” and spoke of a “normalisation” of the global economy.

That came after the International Energy Agency said the second half of the year could see a gap between demand and supplies, which could push prices even higher.

However, the group gave little away about plans for August and its views on the possibility of Iranian oil coming back to the market if it seals a nuclear deal with world powers that will lift sanctions on the country.