NEW YORK: Oil edged higher on Thursday, bolstered by strong demand and concerns about short-term supply disruptions, even though U.S. crude inventories rose for the first time in eight weeks. Brent crude futures were up 18 cents, or 0.2%, at $88.61 a barrel at 1:12 p.m. EST (1812 GMT). The global benchmark rose to $89.17 on Wednesday, its highest level since October 2014.
U.S. West Texas Intermediate (WTI) crude futures for February delivery were down 26 cents, or 0.3%, at $86.70 a barrel. The contract, which expires on Thursday, climbed to $87.91 on Wednesday. The more active March WTI contract was up 5 cents to $85.86.
Trading has been dominated by supply concerns, from short-term issues like a temporary halt to flows in an Iraq-to-Turkey pipeline to a consistent shortfall from OPEC+ members in reaching targeted supply increases.
“The voices of those forecasting $100 per barrel oil are getting louder by the day,” said Tamas Varga at oil brokerage PVM.
In the meantime, demand remains steady, with U.S. product supplied, a proxy for demand in the world’s largest consumer, reaching 21.2 million bpd over the past four weeks, ahead of the pre-pandemic pace.
Crude stocks rose by 515,000 barrels last week while gasoline inventories rose by 5.9 million barrels, boosting those inventories to their highest in a year, according to the U.S. Energy Department.
“I don’t think the build in gasoline supplies is a bull killer. We’re going to need refiners to continue to refine to meet gasoline demand in the summer driving seasons - that is one of the reason the market is still supported despite the build in gasoline supplies,” said Phil Flynn, senior analyst at Price Futures Group.
Supply concerns have mounted this week after a fire temporarily halted flows through an oil pipeline running from Iraq’s Kirkuk to the Turkish port of Ceyhan on Tuesday.
The OPEC+ producer group comprising OPEC and allies led by Russia has been producing less than its targets, with the International Energy Agency (IEA) on Wednesday estimating that the group produced about 800,000 barrels per day (bpd) below its December targets.
The IEA said that while the oil market could be in a significant surplus in the first quarter of this year, inventories are likely to be well below pre-pandemic levels. The agency also upgraded its 2022 demand forecast.
An attack by Yemen’s Houthis on the United Arab Emirates, the third-largest producer in the Organization of the Petroleum Exporting Countries (OPEC), heightened risks among big suppliers. The relative strength index (RSI) for WTI, a measure of momentum, was at levels last seen in October, suggesting the rally is at risk of becoming overextended and ripe for sellers to come into the market.