On Monday, oil prices rose as supply shortage and political tensions in Eastern Europe and the Middle East continues to pressurize prices.
Brent crude increased by 1% to $90.90 a barrel by 12:28 GMT, U.S. West Texas Intermediate crude rose 47 cents, or 0.5%, to $87.29 a barrel.
The benchmarks recorded their highest levels since October 2014 on Friday, $91.70 and $88.84, respectively, and their sixth straight weekly gain. They were headed for about 17% gains this month, the most since February 2021.
“Today it is above all the concerns about supply outages in connection with the Ukraine crisis that keep pushing prices ever further up,” said Commerzbank commodities analyst Carsten Fritsch.
The head of NATO said on Sunday that Europe needed to diversify its energy supplies as Britain warned it was “highly likely” that Russia was looking to invade Ukraine.
UBS analyst Giovanni Staunovo said “ongoing geopolitical tensions, more European countries planning to lift Covid related restrictions and renewed supply disruptions in Ecuador are supporting oil prices at the start of the week.”
OCP Ecuador, the operator of the country’s privately held heavy crude pipeline, suspended pumping crude on Saturday as a preventative measure after it ruptured in the Amazon (NASDAQ:AMZN), and began cleaning and repairs.
For oil prices, bullish sentiment will likely prevail this week, analysts said, with an expectation that OPEC+ will keep to its existing policy of gradual production increases.
Major producers in the Organization of the Petroleum Exporting Countries (OPEC) and allies led by Russia, collectively known as OPEC+, have raised their output target each month since August by 400,000 barrels per day (bpd).
At its Feb. 2 meeting, OPEC+ is likely to stick with a planned rise in its oil output target for March, several OPEC+ sources told Reuters.
Reuters survey of 43 economists and analysts forecast Brent would average $79.16 a barrel this year, a notable increase from December’s $73.57 consensus. U.S. crude was forecast to average $76.23 in 2022, versus the $71.38 forecast last month.
The oil forward curves were in deep backwardation, a market structure that encourages traders to release oil from storage and sell it promptly.
The six-month spread between Brent for March delivery versus September delivery was $6.75 on Friday, the steepest since 2013. At that time, oil prices were above $100 a barrel, a level analysts predict could be seen again this year as demand outstrips supply.
Meanwhile in the Nigerian market, Nigerian crude product, Brass RIver and Qua Iboe both gained 0.88% to trade at $90.44 per barrel as of Friday, 28th January 2022, while Bonny Light already trades above $91.38 per barrel.