Oil prices rose on Wednesday towards last week’s seven-year highs after data showing a fall in U.S. crude stocks underlined solid demand, but investors remained cautious ahead of an OPEC+ meeting due later in the day.
Brent crude climbed 36 cents, or 0.4%, to $89.52 a barrel by 0123 GMT, after easing 10 cents on Tuesday.
U.S. West Texas Intermediate crude was up 38 cents, or 0.4%, at $88.58 a barrel, having gained 5 cents the previous day.
Tight global supplies and geopolitical tensions in Eastern Europe and the Middle East have boosted oil prices by more than 15% so far this year. On Friday, crude benchmarks hit their highest prices since October 2014, with Brent touching $91.70 and U.S. crude hitting $88.84.
“A drop in U.S. crude inventories provided support, though an increase of gasoline stocks partially offset bullish sentiment,” said Satoru Yoshida, a commodity analyst with Rakuten Securities.
“OPEC+ is likely to maintain its policy unchanged, which means a supply shortage and an upward trend in oil prices will continue,” he said.
U.S. crude stocks fell by 1.6 million barrels for the week ended Jan. 28, against analysts’ estimate of an increase of 1.5 million barrels, according to market sources citing American Petroleum Institute figures on Tuesday.
But gasoline inventories rose by 5.8 million barrels, above analysts’ expectations for a 1.6 million build.
OPEC+ Sticks With Oil Production Policies.
The Organization of the Petroleum Exporting Countries and allies, together known as OPEC+, will likely stick to existing policies of moderate output increases on Wednesday, five sources from the producers’ group said, even as it expects demand to rise to new peaks this year and as oil prices trade near their seven-year highs.
But Goldman Sachs said there was a chance the oil market’s rally would prompt a faster ramp-up.
Sources said an OPEC+ technical panel meeting on Tuesday did not discuss a hike of more than the expected 40,000 barrels per day from March.
Tensions between Russia and the West also underpinned crude prices. Russia, the world’s second-largest oil producer, and the West have been at loggerheads over Ukraine, fanning fears that energy supplies to Europe could be disrupted.
On Tuesday, Russian President Vladimir Putin accused the West of deliberately creating a scenario designed to lure it into war and ignoring Russia’s security concerns over Ukraine.