Oil rose to around $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.
OPEC supply additions are running below their allowed increase under a pact with allies due to a lack of capacity in some countries. Major economies have avoided a return to severe lockdowns, even as coronavirus cases soar.
Brent crude gained $1.14, or 1.4%, to $82.01 a barrel at 1134 GMT, after dropping 1% in the previous session. U.S. West Texas Intermediate (WTI) rose $1.16, or 1.5%, to $79.39, after falling 0.8% 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 50% in 2021 and has rallied further in 2022 as investors see demand rising while OPEC and its allies, known as OPEC+, slowly ease record output cuts made in 2020.
Outages in Libya have also supported prices and while production has risen, the National Oil Corp. said on Tuesday it was suspending exports from the Es Sider terminal.
“The higher oil production in the country has not yet translated directly into an increase in available oil supply,” said Carsten Fritsch of Commerzbank. “This may explain why oil prices have not responded as yet to the reopening of the Libyan oilfields.”
A weaker U.S. dollar also helped support oil as it makes oil cheaper for those holding other currencies and tends to reflect higher investor risk appetite.