Oil edges higher on tight supply and post-pandemic recovery

Oil edges higher on tight supply and post-pandemic recovery

TOKYO: Oil prices edged higher on Tuesday, trading near seven-year highs hit last week, as investors bet supplies will stay tight, with a limited production hike by major oil producers and a strong post-pandemic recovery in fuel demand.

Brent crude for April delivery was up 14 cents, or 0.2% at $89.40 a barrel at 0150 GMT.

The front-month contract for March delivery expired on Monday at $91.21 a barrel, up 1.3%.

U.S. West Texas Intermediate crude rose 13 cents, or 0.2%, to $88.28 a barrel, having gained 1.5% in the previous day.

The benchmarks hit their highest levels since October 2014 on Friday, at $91.70 and $88.84, respectively. They have gained about 17% in January, the biggest monthly gain since February 2021, amid a supply shortage and geopolitical tensions in Eastern Europe and the Middle East.

"The market is maintaining a bullish tone on expectations that supply tightness will continue as demand is picking up, with receding fears over spreading Omicron coronavirus variant," said Hiroyuki Kikukawa, general manager of research at Nissan Securities.

"All eyes are on OPEC+ decision as well as development of the conflict between Russia and the West over Ukraine," he said, predicting WTI could reach $90 a barrel soon.

Market analysts and Reuters