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Brent crude futures were up 33 cents, or 0.41%, at $80.13 a
barrel by 1215 GMT, adding to a 76 cent gain in the previous
session.
U.S. West Texas Intermediate (WTI) crude futures for February
delivery rose 57 cents, or 0.75%, to $75.95 after climbing 90
cents on Monday.
Oil prices have been buoyed by U.S. plans to buy up to 3 million
barrels of oil for the Strategic Petroleum Reserve after this
year's record release of 180 million barrels.
A weaker dollar has also supported prices, making oil cheaper
for those holding other currencies.
"Oil prices could see further upside, as we expect physical
markets to tighten further on the back of supply constraints and
stronger global demand," Qatari bank QNB said in a note,
predicting prices at $90-$115 a barrel in the coming quarters.
Barclays analysts said Russian oil output could fall by 1
million barrels per day (bpd) by the end of March after full
implementation of EU sanctions and that the reopening of China's
economy could boost demand by 1-2 million bpd.
OANDA analyst Edward Moya said in a note that clear signs of
growing demand are needed for prices to climb further.
"The oil demand outlook will be key for how high crude prices
can go," he said, adding that clarity on that could prove
elusive given mixed signals on the reopening of China's economy.
While China has been relaxing pandemic restrictions, a surge in
COVID-19 cases has been bearish for oil markets because of
uncertainty over the country's economic recovery, said CMC
Markets analyst Tina Teng.
Cities across the country have been racing to add hospital beds
and build fever-screening clinics amid growing international
concern that Beijing's decision to dismantle its stringent
"zero-COVID" regime could result in deaths and virus mutations.
U.S. crude oil stocks were expected to have dropped last week by
about 200,000 barrels while gasoline and distillates inventories
were expected to be higher, a preliminary Reuters poll showed on
Monday.
The poll was conducted ahead of reports from the American
Petroleum Institute on Tuesday and the Energy Information
Administration on Wednesday.
(Reporting by Dmitry Zhdannikov in LondonAdditional reporting by
Sonali Paul in Melbourne and Isabel Kua in SingaporeEditing by
David Goodman)
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