Oil prices ticked up on Tuesday alongside rising European shares and amid reports of a blast in Saudi Arabia, trading near 11-month highs.
Brent crude was up $0.43, or 0.8%, at $56.31 by 1117 GMT, while US crude rose $0.43, or 0.8%, to $53.20. Both contracts rose nearly 1% on Monday and are set to post the third monthly rise in a row.
Prices moved up slightly after reports of a blast in the Saudi Arabian capital Riyadh, although the cause remains unclear.
In Europe, gains in financial services and chemical sectors helped stocks rise on Tuesday. Risk assets such as equities and oil often move in tandem.
On the supply side, the Organisation of the Petroleum Exporting Countries and its allies’ compliance with pledged oil output curbs is averaging 85% in January, tanker tracker Petro-Logistics said on Monday. The findings suggest the group has improved compliance with supply curb commitments.
Also, output from the giant Tengiz field in Kazakhstan was disrupted by a power cut on January 17.
“It appears that market players are cautiously sanguine about the producer group’s market management strategy and therefore about the imminent depletion in global oil inventories,” PVM analysts said.
Dampening bullish sentiment, US Democrats are still trying to convince Republican lawmakers of the need for more stimulus, raising questions over when and in what form a package will be approved.
Even as the pace of new infections falls in the United States, European nations have set tough restrictions to combat the spread of the coronavirus while vaccines are rolled out.
China is reporting rising Covid-19 cases, casting a pall over demand prospects in the world’s largest energy consumer.
Still, there are areas where demand for oil remains strong.
In India, crude oil imports in December rose to their highest in more than two years as the easing of coronavirus restrictions boosted economic activity.