Brent crude futures fell 17 cents, or 0.2%, to $79.36 a barrel at 0121 GMT after surging 1.8% and reaching its highest since October 2018 on Monday.
U.S. West Texas Intermediate (WTI) crude futures dropped 9 cents, or 0.1%, to $75.36 a barrel, having risen 2% and hitting its highest since July the previous day.
“Oil markets took a breather after a long rally, with some investors scooping up profits,” said Toshitaka Tazawa, an analyst at Fujitomi Securities Co Ltd, adding that there were also concerns that surging oil prices may reduce fuel demand.
“Still, the market sentiment remained strong with tighter supply,” he said, predicting that Brent may try a key $80 a barrel soon.
Top African oil exporters Nigeria and Angola will struggle to boost output to their OPEC quota levels until at least next year as underinvestment and nagging maintenance problems continue to hobble output, sources at their respective oil firms warn.
Their battle mirrors that of several other members of the OPEC+ group who curbed production in the past year to support prices when COVID-19 hit demand, but are now failing to ramp up output to meet soaring global fuel needs as economies recover.
Boosting investors’ risk appetite, Goldman Sachs raised by $10 its year-end forecast for Brent crude to $90 per barrel. Global supplies have tightened due to the fast recovery of fuel demand from the outbreak of the Delta variant of the coronavirus and Hurricane Ida’s hit to U.S. production.
Analysts say climbing prices of spot liquefied natural gas (LNG) and coal may also bolster oil prices further.
“Oil demand could pick up by an additional 0.5 million barrels per day, or 0.5% of global oil supply, as high gas prices force a switch from gas to oil consumption,” Commonwealth Bank commodities analyst Vivek Dhar said in a note.
“That is set to tighten oil markets further, especially with supply additions from OPEC+ remaining quite conservative,” he said, adding that energy prices could still rally from here if the winter period in the northern hemisphere proved colder than expected. (Reporting by Yuka Obayashi; Editing by Stephen Coates)