Oil rose towards $85 a barrel on Tuesday, not far from a multi-year high, supported by signs that supply from OPEC and other producers is falling short as demand recovers from the worst of the pandemic.
The increase in OPEC’s oil output in October undershot the rise planned under a deal with allies, a Reuters survey found on Monday, due to involuntary outages and limited capacity in some smaller producers.
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Brent crude gained 20 cents, or 0.2 percent, to $84.91 a barrel by 0910 GMT, while US West Texas Intermediate (WTI) crude climbed 14 cents, or 0.2 percent, to $84.19.
“Global oil demand is healthy and supply is trying to play catch-up,” said Tamas Varga of oil broker PVM. “These efforts are not producing results.”
The price of Brent has surged more than 60 percent in 2021, hitting a three-year high of $86.70 last week as demand recovers and the Organization of the Petroleum Exporting Countries and allies led by Russia, or OPEC+, eases record output cuts slowly.
“Demand for crude oil is expected to rise as winter months approach,” said Naeem Aslam of Avatrade. “On the other hand, supply is expected to remain the same.”
OPEC+, which cut output by 9.7 million barrels per day or about 10 percent of daily demand in 2020, has been sticking to gradual, monthly production increases of 400,000 bpd, despite calls for more from the United States and other consumers.
The alliance is expected to do just that at its next meeting, scheduled for Thursday.
Limiting the gain in prices were expectations this week’s snapshot of US supply will show another rise in crude inventories. Analysts in a Reuters poll see an increase of 1.6 million barrels.
Industry group the American Petroleum Institute releases the first of this week’s two supply reports at 2030 GMT.
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