Oil held near $84 a barrel on Tuesday, within sight of a three-year high, supported by a rebound in global demand that is contributing to energy shortages in big economies such as China.
With demand growing as economies recover from pandemic lows, the Organization of the Petroleum Exporting Countries and allied producers, collectively known as OPEC+, are sticking to plans to restore output gradually rather than boost supply quickly.
"OPEC+ will push ahead with its cautious approach to supply in the year-end period. Set against this backdrop, oil bears will remain in hibernation mode," said Stephen Brennock of oil broker PVM.
Brent crude was up 1 cent at $83.66 a barrel by 1325 GMT. On Monday it hit $84.60, its highest since October 2018. U.S. oil fell 50 cents, or 0.6%, to $80.02, having hit its highest since late 2014 on Monday at $82.18.
Jeffrey Halley, analyst at brokerage OANDA, said the lack of significant change in prices on Tuesday could be because the market looks overbought based on short-term technical indicators such as the relative strength index.
"It would not surprise me in the least if we saw a sharp sell-off of $5 to $8 a barrel at some stage this week," he said.
The price of Brent has surged by more than 60% this year. As well as OPEC+ supply restraint, the rally has been spurred by record European gas prices, which have encouraged a switch to oil for power generation in some places.
European gas at the Dutch TTF hub on Tuesday stood at a crude oil equivalent of about $169 a barrel, based on the relative value of the same amount of energy from each source, Reuters calculations based on Eikon data showed.
Power prices have surged to record highs in recent weeks, driven by energy shortages in Asia, Europe and the United States. The energy crisis affecting China is expected to last through to the end of the year.
With prices rising, OPEC+ has come under pressure from consumer nations. A U.S. official on Monday said the White House stands by its calls for oil-producing countries to "do more".
