Oil Prices Hold Near $80 on Tight Supply and Stocks Drop
Oil prices held close to $80 a barrel on Wednesday as global supply outages and declining U.S. inventories offset worries that rising coronavirus cases might reduce demand.
Brent crude rose to as much as $79.20 a barrel before retreating to trade 24 cents down on the day at $78.70 by 1427 GMT. U.S. West Texas Intermediate (WTI) crude edged 32 cents lower to $75.65 after touching $76.17.
Both contracts are trading near their highest in a month, aided by strength in global equities.
"Markets are overwhelmingly pricing in the latest coronavirus variant as a milder incarnation, despite its easier contractibility," OANDA analyst Jeffrey Halley said in a note.
"With market activity much reduced for the holiday season, investors continue to tentatively price in a global recovery hitting a minor bump and not a pothole".
American Petroleum Institute data showed U.S. crude stocks fell by 3.1 million barrels in the week ended Dec. 24, market sources said late on Tuesday, in line with expectations of nine analysts polled by Reuters.
Weekly data from the U.S. Energy Information Administration is due later on Wednesday.
Oil prices have been underpinned by Ecuador, Libya and Nigeria declaring forces majeures this month on part of their oil production because of maintenance issues and oilfield shutdowns.
Russian Deputy Prime Minister Alexander Novak said that the OPEC+ group of producers has resisted calls from Washington to boost output because it wants to provide the market with clear guidance and not deviate from policy on gradual increases to productions.
Investors are awaiting an OPEC+ meeting on Jan. 4, at which the alliance will decide whether to proceed with a planned production increase of 400,000 barrels per day in February.
At its last meeting OPEC+ stuck to its plans to boost output for January despite the spread of the Omicron variant.
(Reporting by Dmitry Zhdannikov, Mohi Narayan and Naveen Thukral Editing by Emelia Sithole-Matarise and David Goodman)