Tokyo, Feb. 2 (BNA): Oil prices rose on Wednesday towards last week’s seven-year highs as a draw in US crude stocks confirmed strong demand and short supply, but investors remained cautious ahead of the OPEC+ meeting later today. .
Brent crude rose 17 cents, or 0.2 percent, to $89.33 a barrel by 0339 GMT, after falling 10 cents on Tuesday.
US West Texas Intermediate crude rose 16 cents, or 0.2%, to $88.36 a barrel, after rising 5 cents the day before.
Tight global supplies and geopolitical tensions in Eastern Europe and the Middle East have pushed oil prices up about 15% so far this year. On Friday, benchmark crude hit its highest price since October 2014, with Brent touching $91.70 and US crude touching $88.84.
“Low US crude inventories provided support, although the increase in gasoline stocks partially offset the bullish sentiment,” said Satoru Yoshida, commodity analyst at Rakuten Securities.
“OPEC + is likely to keep its policy unchanged, which means the continuation of the supply shortage and the upward trend in oil prices,” he said.
US crude stocks fell 1.6 million barrels for the week ending Jan. 28, versus analyst estimates for an increase of 1.5 million barrels, according to market sources citing figures from the American Petroleum Institute on Tuesday.
But gasoline stocks rose by 5.8 million barrels, topping analysts’ expectations for an increase of 1.6 million barrels.
Five sources from the group of producers said the Organization of the Petroleum Exporting Countries and its allies, known as OPEC+, are likely to stick to current policies of moderate production increases on Wednesday, even as they expect demand to rise to new peak levels this year and with oil prices trading near its highest levels in seven years.
But Goldman Sachs said there was a chance that the oil market’s rally could lead to a faster escalation.
Sources said that the meeting of the OPEC + technical committee on Tuesday did not discuss an increase of more than 40,000 barrels per day expected from March.
“If Saudi Arabia and Russia show any signs of increasing their production to withstand the shortage of some members who cannot meet their production targets, oil prices are likely to fall,” said Tetsuo Emori, CEO of Emori Fund Management Inc.
“But if there are no such surprises, the market is expected to maintain an uptrend as demand recovers and geopolitical tensions persist,” he said.
Tensions between Russia and the West have also boosted crude oil prices. Russia, the world’s second largest oil producer, has been at loggerheads with the West over Ukraine, raising fears that energy supplies to Europe could be disrupted.
On Tuesday, Russian President Vladimir Putin accused the West of creating a deliberate scenario luring him into war and ignoring Russia’s security concerns about Ukraine.
HF