Oil prices hover around 2014 highs, supported by supply issues
SINGAPORE — Oil stabilized on Thursday, recouping losses earlier in the session, as strong demand and near-term supply disruptions continue to support prices near their highest levels since late 2014.
Brent crude futures fell 17 cents, or 0.2%, to $88.27 a barrel, at 0418 GMT, after falling more than $1 earlier in the session. The global benchmark hit $89.17 a barrel on Wednesday, its highest level since October 2014.
U.S. West Texas Intermediate (WTI) crude futures rose 7 cents, or 0.1%, to settle at $87.03 a barrel, after also losing nearly $1 earlier. WTI climbed as high as $87.91 on Wednesday, the highest since October 2014.
“The International Energy Agency said global oil demand is on track to return to pre-pandemic levels,” analysts at ANZ Bank said in a note.
“Nearer-term supply disruptions are also helping to tighten markets. Brent crude rebounded strongly after reports reported that a key oil pipeline linking Iraq to Turkey was destroyed by an explosion.”
However, the flow of crude oil through the Kirkuk-Ceyhan pipeline has resumed, after being halted on Tuesday due to an explosion near the pipeline in Kahramanmaras province in southeastern Turkey, it said. officials on Wednesday.
Supply problems intensified this week after Yemen’s Houthi group attacked the United Arab Emirates, the third-largest producer in the Organization of the Petroleum Exporting Countries (OPEC). Meanwhile, Russia, the world’s second-largest oil producer, has built up a large military presence near the Ukrainian border, stoking fears of invasion and attendant supply uncertainties.
Oil prices underpin the widespread recovery in fuel demand after the coronavirus pandemic.
OPEC officials and analysts say an oil rally could continue in the coming months and prices could top $100 a barrel as demand drops from the spread of the Omicron variant COVID-19 .
OPEC+, which groups the cartel with Russia and other producers, is struggling to meet a monthly production increase target of 400,000 barrels per day (bpd).
U.S. crude and gasoline inventories rose while distillate inventories fell last week, according to market sources citing figures from the American Petroleum Institute on Wednesday.
Crude inventories rose 1.4 million barrels for the week ended Jan. 14. Gasoline inventories rose 3.5 million barrels while distillate inventories fell 1.2 million barrels, according to the sources, who spoke on condition of anonymity. — Agencies