By Adedapo Adesanya
Crude oil ended positive on Tuesday as geopolitical tensions and tight global supplies supported the market after dropping in earlier sessions ahead of the meeting of the Organisation of the Petroleum Exporting Countries and allies, together known as OPEC+.
During the session, the Brent crude climbed 36 cents or 0.4 per cent to $89.52 per barrel while the United States West Texas Intermediate crude was up by 38 cents or 0.4 per cent to sell at $88.58 a barrel.
Recently, crude benchmarks hit their highest prices since October 2014, with Brent touching $91.70 and US crude hitting $88.84.
This happened as supply shortage and political tensions in the Middle East and between Russia and the West over Ukraine proved bullish for the oil market.
However, the gains happened as OPEC+ is expected to decide at a monthly meeting on Wednesday, February 2 to keep gradually increasing production.
At the earlier OPEC+ technical panel meeting on Tuesday, which holds before the oil ministers hold theirs, it was reported by Reuters that they did not discuss a hike of more than the expected 40,000 barrels per day from March.
An investment bank, Goldman Sachs, however, said there was a chance the oil market’s rally would prompt a faster ramp-up.
All indications show that the alliance is likely to maintain its policy unchanged, which means a supply shortage and an upward trend in oil prices will continue.
Also, a drop in US crude inventories provided support, though an increase in fuel stocks partially offset bullish sentiments in the world’s largest oil producer.
According to the American Petroleum Institute (API) figures on Tuesday, US crude inventories fell by 1.6 million barrels for the week ended January 28, against analysts’ estimate of an increase of 1.5 million barrels.
The market will wait for data from the US government agency, the Energy Information Administration (EIA), on Wednesday to confirm the accurate figures.
Tensions between Russia and the West also underpinned crude prices. Russia, the world’s second-largest oil producer, and the West have been at loggerheads over Ukraine, stoking fears that energy supplies to Europe could be disrupted.
On Tuesday, Russian President Vladimir Putin accused the West of deliberately creating a scenario designed to lure it into war and ignoring Russia’s security concerns over Ukraine.
