Oil prices slipped back on Thursday after hitting their highest levels since 2014 in the previous session on the back of strong demand and short-term supply disruptions, underlying factors that limited losses as investors took profits.
Brent crude futures dropped 72 cents, or 0.81 percent, to $87.72 a barrel, as of 0152 GMT. The global benchmark touched $89.13 a barrel in the last session, its highest since October 2014.
U.S. West Texas Intermediate (WTI) crude futures gave up 96 cents, or 1.1 percent, to stand at $86 a barrel.
“The International Energy Agency said global oil demand is on track to hit pre-pandemic levels,” analysts at ANZ bank said in a note.
“Shorter-term supply disruptions are also helping tighten markets. Brent crude rallied sharply after reports a key oil pipeline running from Iraq to Turkey was knocked out by an explosion.”
However, the flow of crude oil through the Kirkuk-Ceyhan pipeline has resumed, after it was halted on Tuesday due to a blast near the pipeline in the southeastern Turkish province of Kahramanmaras, officials said on Wednesday.
Supply concerns have mounted this week after Yemen’s Houthi group attacked the United Arab Emirates, the third-largest producer in the Organization of the Petroleum Exporting Countries (OPEC). Meanwhile Russia, the world’s second-largest oil producer, has built up a large troop presence near Ukraine’s border, stoking fears of invasion and subsequent supply uncertainties.
Underpinning oil prices is the broad post-coronavirus pandemic recovery in demand for fuel.
OPEC officials and analysts say that an oil rally may continue in the next few months, and prices could top $100 a barrel as demand shrugs of the spread of the Omicron COVID-19 variant.
OPEC+, which groups the cartel with Russia and other producers, is struggling to hit a monthly output increase target of 400,000 barrels per day (bpd).
US crude and gasoline stocks rose while distillate inventories fell last week, according to market sources citing American Petroleum Institute figures on Wednesday.
Crude stocks rose by 1.4 million barrels for the week ended on January 14. Gasoline inventories rose by 3.5 million barrels while distillate stocks fell by 1.2 million barrels, according to the sources, who spoke on condition of anonymity.