Oil prices rose sharply on Thursday, extending a rally from the previous session, on escalating unrest in OPEC+ oil producer Kazakhstan and supply outages in Libya.
The global benchmark Brent crude futures advanced $1.19, or 1.5%, to $81.99 per barrel. U.S. West Texas Intermediate (WTI) crude futures settled 2.07%, or $1.61, higher at $79.46 per barrel.
Both contracts were trading at their highest since late November.
Brent's 6-month market structure stood at about $4 a barrel in backwardation- where current prices trade at a premium to future prices - its widest since late November and usually a sign of a bullish market.
Russia sent paratroopers into Kazakhstan on Thursday to help quell a countrywide uprising after deadly violence spread across the tightly controlled former Soviet state.
"The political situation in Kazakhstan is becoming increasingly tense," Commerzbank said.
"And this is a country that is currently producing 1.6 million barrels of oil per day."
There were no indications that oil production has been affected so far.
Libyan oil output is down by over 500,000 barrels per day due to pipeline maintenance and oilfield shutdowns.
Prices rallied despite a surge in U.S. fuel stocks last week.
U.S. crude oil stockpiles fell last week while gasoline inventories surged more than 10 million barrels, the biggest weekly build since April 2020, as supplies backed up at refineries due to reduced fuel demand.
Also, minutes from a U.S. Federal Reserve meeting that showed policymakers may raise rates more quickly than markets anticipated weighed on riskier assets such as oil.
OPEC+, a group that includes members of the Organization of the Petroleum Exporting Countries, Russia and other producers, agreed on Tuesday to add another 400,000 bpd of supply in February, as it has done each month since August.
"Our reference case now assumes the alliance will fully phase out the remaining 2.96 million bpd of oil production cuts by September 2022," JP Morgan analysts said in a note.
"With signs of demand withstanding the Omicron variant, low stocks and increasing market vulnerability to supply disruptions, we see the need for more OPEC+ barrels," the bank said. JP Morgan forecast Brent prices to average at $88 a barrel in 2022, up from $70 last year.
Meanwhile, the world's top oil exporter, Saudi Arabia, cut the official selling price for all grades of crude it sells to Asia in February by at least $1 a barrel, three sources with knowledge of the matter said on Thursday.