Oil climbs on lower supply and post-pandemic recovery
Oil prices climbed on Tuesday, hovering near seven-year highs hit last week, on expectations that a limited production increase by major oil producers and a solid post-pandemic recovery in fuel demand will keep a tight supply condition, News.Az reports citing Reuters.
Brent crude for April delivery was up 34 cents, or 0.4% at $89.60 a barrel at 0455 GMT.
The front-month contract for March delivery expired on Monday at $91.21 a barrel, up 1.3%.
U.S. West Texas Intermediate crude rose 32 cents, or 0.4%, to $88.47 a barrel, having gained 1.5% in the previous day.
The benchmarks hit their highest levels since October 2014 on Friday, at $91.70 and $88.84, respectively. They have gained about 17% in January, the biggest monthly gain since February 2021, amid a supply shortage and geopolitical tensions in Eastern Europe and the Middle East.
"The market is maintaining a bullish tone on expectations that supply tightness will continue as demand is picking up, with receding fears over spreading Omicron coronavirus variant," said Hiroyuki Kikukawa, general manager of research at Nissan Securities.
OPEC's oil output in January has again undershot the rise planned under a deal with allies, a Reuters survey found on Monday, highlighting some producers' struggle to pump more even as prices are high.
"We expect little surprise from the OPEC+ meeting, though there is a small chance that Saudi will voluntarily increase output outside the OPEC framework to avoid the fall in demand caused by higher prices," said Naohiro Niimura, a partner at Market Risk Advisory, a research and consulting firm.
"If no surprise, Brent is expected to stay between $85 and $95 for a while due to concerns over supply shortage amid rising geopolitical tensions," he said.