Brent crude futures gained 42 cents, or 0.5%, to $86.48 a barrel at 0022 GMT. The contract hit its highest since October 3, 2018 – $86.71 – earlier in the session.
U.S. West Texas Intermediate crude rose 62 cents, or 0.7%, to $84.44 a barrel, after hitting $84.78, the highest since Nov. 10, 2021, earlier in the session.
The gains followed a rally last week when Brent rose 5.4% and WTI 6.3%.
Rampant oil buying, driven by supply disruptions and signs that the Omicron variant won’t be as disruptive to fuel demand as expected, has pushed some crude grades to multi-year highs, suggesting the contract rally Brent futures could be held a bit longer, traders mentioned.
“The bullish sentiment continues as (the producer group) OPEC+ is not delivering enough supply to meet strong global demand,” said Toshitaka Tazawa, analyst at Fujitomi Securities Co Ltd.
“If (investment) funds increase the allocation weight for crude, prices could reach their 2014 highs,” he said.
The Organization of the Petroleum Exporting Countries (OPEC) and its allies – OPEC+ – are gradually easing production cuts put in place when demand slumped in 2020.
But many smaller producers cannot increase supply and others are reluctant to pump too much oil in the event of further setbacks from COVID-19.
Fears of a Russian attack on neighboring Ukraine that could disrupt energy supplies also supported prices.
U.S. officials on Friday expressed concerns that Russia is preparing to attack Ukraine if diplomacy fails. Russia, which has massed 100,000 troops on the Ukrainian border, has released photos of its forces on the move.
The US government has held talks with several international energy companies on contingency plans to supply natural gas to Europe if the conflict between Russia and Ukraine disrupts Russian supplies, two US officials told Reuters on Friday. and two industry sources.
U.S. crude oil inventories, meanwhile, fell more than expected to their lowest levels since October 2018, but gasoline inventories jumped on weak demand, Energy Information reported on Wednesday. Administration.
Concerns about supply constraints outweighed news of a possible release of oil from China’s reserves, Fujitomi analyst Tazawa said.
Sources told Reuters that China plans to release oil reserves around the Lunar New Year holiday between January 31 and February 6 as part of a plan coordinated by the United States with other major consumers. to reduce world prices.
