Oil prices edged higher on Tuesday on the expected recovery in demand from China as it eased tough COVID restrictions and doubts a higher production target by OPEC+ producers would reduce tight supply .
Brent crude futures were up 19 cents, or 0.2%, at $119.70 a barrel at 0050 GMT.
U.S. West Texas Intermediate (WTI) crude futures rose 25 cents, or 0.2%, to $118.75 a barrel. The benchmark hit a three-month high of $120.99 on Monday.
The easing of travel restrictions in China is expected to boost oil demand in the coming weeks, analysts at ANZ Research said in a note.
Beijing and the Shanghai Mall have returned to normal in recent days after two months of painful lockdowns to stem outbreaks of the Omicron variant. Traffic bans were lifted and restaurants opened for dine-in service Monday in most areas of Beijing.
Major oil exporter Saudi Arabia raised the July official selling price (OSP) of its flagship Arab light crude to Asia by $2.10 from June to a premium of 6, $50 against Oman/Dubai quotes, just off an all-time high recorded in May when prices hit highs. due to fears of Russian supply disruptions.
Last week, the Organization of the Petroleum Exporting Countries and its allies, collectively known as OPEC+, decided to increase production for July and August by 648,000 barrels per day, or 50% more than expected.
The target increase was split among all OPEC+ members. However, many members have little room to increase production, including Russia, which faces Western sanctions.
“While the new increased monthly targets continue to be driven by proportional contributions from all participants (including Russia), it is unrealistic to expect an increase close to the overall figure,” said Stephen Innes, partner. director of SPI Asset Management, in a note. .
U.S. crude inventories likely fell last week, while gasoline and distillate inventories rose, a preliminary Reuters poll showed on Monday.