Oil remained close to $85 a barrel as the market turns its attention to a meeting of oil producers on Thursday and a growing clamor for crude among consumer nations.
Brent and West Texas Intermediate crudes were little changed on Tuesday, with two days to go until the Organization of Petroleum Exporting Countries and its allies meet to set output policy. Nations including Kuwait have said there’s no need to add barrels more quickly, despite pressure from the U.S. and Japan to do so.
Oil prices hit a seven-year high in October and demand is now back above 100 million barrels a day, a level last seen before the Covid-19 pandemic, according to BP Plc. The energy crisis has also lifted oil demand, prompting Bank of America Corp. to say Brent crude will hit $120 a barrel by the end of June.
“Global oil demand is healthy and supply is trying to play catch-up,” said Tamas Varga, an analyst at PVM Oil Associates. “OPEC+ members are widely expected to stick to their guns on Thursday and only increase output by the pre-agreed 400,000 barrels per day, virtually guaranteeing further stock depletion in December.”
Japan has called on the oil producing group to hold talks to stabilize the market. Over the weekend, U.S. President Joseph Biden urged the group to pump more. If OPEC+ doesn’t, the Biden administration is prepared to release crude from strategic reserves, according to RBC Capital Markets.
Stockpiles at the key U.S. storage hub in Cushing, Oklahoma, recently hit their lowest in three years. Later Tuesday, the American Petroleum Institute will issue estimates for Cushing as well as nationwide holdings.
WTI for December delivery fell 0.2% to $83.90 a barrel on the New York Mercantile Exchange at 10:37 a.m. in London.
Brent for January settlement unchanged at $84.71 a barrel on the ICE Futures Europe exchange.
The crude market’s overall bullishness is reflected in strongly backwardated pricing patterns, with near-term contracts trading above those further out, pointing to tightness of supply. WTI for December is trading around $12 higher than a barrel for the same month in 2022.