OPEC supply additions are running under their allowed boost under a pact with allies due to a shortage of capacity in some countries. [OPEC/O] Major economies have dodged returning to severe lockdowns, even as COVID-19 cases soar.
Brent crude earned $1.14, or 1.4%, to $82.01 a barrel at 1134 GMT, after falling 1% in the previous session. U.S. West Texas Intermediate (WTI) increased $1.16, or 1.5%, to $79.39, after dropping 0.8% on Monday.
According to Jeffrey Halley, an analyst at brokerage OANDA, Omicron has yet to wreak the havoc of the delta variant. It may never do so, holding the global recovery on track.
Brent increased 50% in 2021 and has rallied further in 2022 as investors see demand growing while OPEC and its partners, known as OPEC+, slowly ease record production cuts made in 2020.
Outages in Libya have also sustained prices. While production has risen, the National Oil Corp. stated it was suspending exports from the Es Sider terminal on Tuesday.
Dollar Supporting Inventories
According to Carsten Fritsch of Commerzbank (DE: CBKG), the higher oil production in the country has not yet translated straight into an increase in the available oil supply. This may demonstrate why oil prices have not replied yet to the Libyan oilfields’ reopening.
A softer U.S. dollar also helped support oil as it makes oil more affordable for those holding other currencies and manages to reflect a higher investor risk appetite.
In further demonstrating tight supply, the latest reports on U.S. inventories should deliver crude stockpiles dropped by about 2 million barrels. [API/S]
The first of this week’s supply report from the American Petroleum Institute (API) is expected at 2130 GMT.