By Barani Krishnan
Investing.com — Oil prices settled up at near three-month highs on Tuesday as global supply tightness broadly supported the market while traders awaited U.S. inventory data on crude and other petroleum products.
, the New York-traded benchmark for U.S. crude, settled up 91 cents, or 0.8%, at $119.41 per barrel, after a session high of 120.25.
On Monday, WTI ran up to $121. Year-to-date, the U.S. crude benchmark is up almost 60%.
, the London-traded global benchmark for crude, settled up $1.06, or 0.9%, at $120.57 a barrel.
Earlier, Brent reached an intraday high of $121.18, following through with Monday’s run to $121.85. The global crude benchmark is up 56% on the year.
Oil hit three-month highs on Monday following through with support extended since last week from Europe’s ban against most Russian oil products.
China’s lifting of Covid restrictions, strong US jobs growth and a Saudi hike in the selling price of its crude have also provided a firm bed of support to keep a barrel from sliding beneath $117.
The rally in oil came despite a decision last week by the Organization of the Petroleum Exporting Countries and allies, together called OPEC+, to increase output in July and August by 648,000 barrels per day, or 50% more than previously planned.
Included in the pact was Russia, which has already lost one million barrels in daily production due to sanctions, and countries such as Angola and Nigeria that have repeatedly failed to meet prescribed output targets.
Thus, the net impact of the OPEC+ increase was likely to be around 560,000 barrels daily compared to the scheduled 1.3 million, because most in the oil exporters’ alliance have already maxed out their production, analysts said.
“The fundamentals remain bullish for oil prices as China continues to reopen and the OPEC+ ‘production hike’ does little to alleviate the tightness in the market,” Craig Erlam, analyst at online trading platform OANDA, said on Tuesday.
“Still, it’s been a very strong run over the last month, with the price up more than 20% from the May lows, we could potentially see some profit-taking in the short-term,” Erlam added. “But it’s hard to imagine it being too severe, barring significant growth downgrades or a surge in Covid cases in China.”
Tuesday’s trading in oil drifted as market participants awaited weekly U.S. inventory data from the API, or the American Petroleum Institute.
The API will release at approximately 4:30 PM ET (20:30 GMT) a snapshot of closing balances on U.S. crude, gasoline and distillates for the week ended June 3. The numbers serve as a precursor to official inventory data on the same due from the U.S. Energy Information Administration on Wednesday.
For last week, analysts tracked by Investing.com expect the EIA to report a drop of 1.92 million barrels, versus the 5.07-million barrel reduction reported during the week to May 27.
On the front, the consensus is for a build of 1.08 million barrels over the 711,000-barrel decline in the previous week.
With , the expectation is for a climb of 1.06 million barrels versus the prior week’s deficit of 530,000.