Oil prices are stabilizing for the time being after rising for five consecutive days on fears that higher prices would reduce fuel demand. However, market sentiment remains good in view of the tight global supply.
Brent crude futures rose 1.13% to $79.84 a barrel at 1:25 PM ET.
WTI crude futures rose 1.11% to $76.56 a barrel.
Both futures contracts remained above the $75 mark. Some investors feared that the rise in oil prices could reduce the demand for fuel.
However, the mood on the oil market is good in view of the ongoing supply shortage. Brent futures are expected to reach $80 per barrel. It is also forecast that Brent crude futures could rise by $10 to $90 per barrel by the end of the year. This forecast has greatly boosted investor confidence.
At the same time, OPEC warns that some of its member states may not be able to meet the production quotas. Lack of investment in maintenance and repair is causing problems for oil-producing countries such as Nigeria and Angola.
Global oil supply remains tight. While fuel demand appears to be recovering since the start of the pandemic, the oil supply currently remains constrained due to storm damage in the Gulf of Mexico.
Investors are eagerly awaiting the API inventory report due tomorrow.
In addition, some analysts said that the current rising prices of natural gas (LNG) and coal could also cause the price of oil to rise further. Due to high gas prices, there is a tendency to switch from gas to oil, which could further tighten the oil market.