Oil prices fell on Thursday as investors took profits after a month-long rally. However, strong demand and short-term supply disruptions have kept prices near their highs since late 2014. Brent crude futures were down 49 cents, or 0.6 percent, to $87.95 per barrel at 0740 GMT, after falling more than $1 earlier. The global benchmark rose to $89.17 per barrel on Wednesday, its highest level since October 2014.
WTI crude futures in the United States for February delivery were down 6 cents, or 0.1 percent, at $86.90 a barrel, after falling nearly $1 earlier. On Wednesday, WTI reached a high of $87.91, the highest since October 2014.
The February WTI contract expires on Thursday. For March delivery, the most actively traded contract is currently trading at $85.41 per barrel, down 0.5 percent. According to the International Energy Agency, global oil demand is on track to reach pre-pandemic levels. Short-term supply disruptions are also contributing to market tightening. Brent crude rose sharply following reports that an explosion had disrupted a critical oil pipeline running from Iraq to Turkey.
Concerns about supply have grown this week after Yemen’s Houthi group attacked the United Arab Emirates, the Organization of Petroleum Exporting Countries’ third-largest producer (OPEC). The broad post-coronavirus pandemic recovery in fuel demand is underpinning oil prices.
According to OPEC officials and analysts, the oil rally may continue in the coming months. Prices should reach $100 per barrel as demand shrugs off the spread of the Omicron COVID-19 variant. OPEC+, which includes Russia and other producers in the cartel, is struggling to meet a monthly output increase target of 400,000 barrels per day (BPD).
According to market sources citing American Petroleum Institute figures on Wednesday, crude and gasoline stocks in the United States increased last week while distillate inventories fell. Crude stockpiles increased by 1.4 million barrels in the week ending January 14. According to the sources, who spoke on the condition of anonymity, gasoline inventories increased by 3.5 million barrels. In comparison, distillate stocks decreased by 1.2 million barrels.