Brent oil extended gains to the highest level in seven years as concerns about the demand impact of the Omicron COVID-19 variant eased.
West Texas Intermediate (WTI) oil also rose above $85 a barrel, the first time since October.
Adding to bullish sentiment is further strength in Asia’s physical crude market and shrinking global oil inventories.
Goldman Sachs Group Inc. raised its Brent forecasts through 2022 and 2023, predicting $100 oil in the third quarter.
Crude has made a red-hot start to the year with the market tightening on robust demand and outages at producers including Libya. Segments across the oil complex are showing strength, from diesel to jet fuel, which is soaring in Europe as air travel withstands the omicron impact. OPEC is set to release its monthly report later on Tuesday, providing a snapshot of the market.
“Sentiment in the market remains constructive, and the (Houthi) attack in the UAE has offered only a further boost to prices,” said Warren Patterson, the head of commodities strategy at ING Groep NV, referring to the targeting of civil installations in Abu Dhabi by Houthi terrorists on Monday, an act severely condemned by the UAE as well as leaderships across the world.
“Supply disruptions coupled with firm demand has meant that the oil market is tighter than expected.”
Spot differentials for Russian Sokol oil cargoes scheduled to be shipped in March rose by at least 40 cents a barrel from the previous trade, while the premium commanded by ESPO crude - a favorite grade among Chinese processors - surged to the highest since November, according to traders.
