LONDON—Oil rose to nearly $82 a barrel on Tuesday, supported by tight supply and hopes that rising coronavirus cases and the spread of the Omicron variant will not derail a global demand recovery.
A lack of capacity in some countries has meant that supply additions by the Organization of the Petroleum Exporting Countries (OPEC) are running below the allowed increase under a pact with its allies.
On the demand side, major economies have avoided a return to severe lockdowns, even as coronavirus cases soar.
Brent crude gained 73 cents, or 0.9 percent, to $81.60 a barrel by 1445 GMT, having lost 1 percent in the previous session. U.S. West Texas Intermediate (WTI) rose 77 cents, or 1 percent, to $79 after falling 0.8 percent on Monday.
“Omicron has yet to wreak the havoc of the Delta variant and may never do so, keeping the global recovery on track,” said Jeffrey Halley, analyst at brokerage OANDA.
Brent rose by 50 percent in 2021 and has rallied further in 2022, with investors expecting increasing demand while OPEC and its allies, collectively known as OPEC+, slowly ease record output cuts made in 2020.
Recent outages in Libya have also supported prices and the National Oil Corp. on Tuesday said it was suspending exports from the Es Sider terminal.
“Higher oil production in the country has not yet translated directly into an increase in available oil supply,” said Commerzbank analyst Carsten Fritsch. “This may explain why oil prices have not responded as yet to the reopening of Libyan oilfields.”
A weaker U.S. dollar also helped to support oil because it makes oil cheaper for buyers holding other currencies and tends to reflect higher risk appetite among investors.
In what would be a further indication of tight supply, the latest reports on U.S. inventories are expected to show crude stockpiles fell by about 2 million barrels.
The first of this week’s supply reports, from the American Petroleum Institute (API), is due at 2130 GMT.
