(Bloomberg) — Oil trekked higher as global supplies are on track to be tighter than previously expected amid easing fears over the omicron variant’s hit to global demand.

New York futures rose 1.2% and settled at $80 per barrel, the highest level since November. This was because OPEC+ remained true to its goal of increasing output. Benchmark West Texas Intermediate crude rose to a session record, the highest since November 26th. 

Demand outstripping the omicron variation, the OPEC+ producer organization approved Tuesday a 400,000 barrel per day rise in February’s production. The analysts of the OPEC+ producer group on Monday revised their estimates to produce a surplus during the first quarter. They also predicted lower supply growth from its rivals.

“Prices are heading higher after OPEC+ showed they are more confident that the global crude demand outlook will only take a limited hit, said Ed Moya, Oanda’s senior market analyst for the Americas. Higher oil prices are supported by geopolitical threats such as Russia-Ukraine tensions or the long-stalled Iran nuclear deal renewal talks, he said. 

OPEC+ is seeing a better supply-demand picture. The group’s production increases are likely to be less than the agreed levels as some members struggle. Russia did not increase its output while OPEC member Libya’s production is likely to drop again this week. Markets remain in a bullish-backwardation pattern which means that supply is tight. 

“The biggest challenge is starting to be to actually implement the theoretical rise in production as more and more producers start to struggle,” said Hans van Cleef, senior energy economist at ABN Amro.

Omicron’s spread isn’t reducing oil demand, given the low level of hospitalizations, Russia’s Deputy Prime Minister Alexander Novak said in an interview with state Rossiya 24 TV.

Brent should stay in the $80-a-barrel range for a while, unless risk appetite deteriorates or if the stock market sells off, said Oanda’s Moya. He said that WTI would likely stabilize around $77.

According to a Bloomberg report, the OPEC+ Joint Technical Committee which analyses the market for ministers sees a surplus at 1.4million barrels per day in the first 3 months of 2022. This is about 25% lower than what it had estimated a month earlier.

You can also see U.S. Oil Market Sets $4.6 Billon Wave of Sales

The industry-funded American Petroleum Institute said that last week crude stock fell to 6.432 billion barrels. This according to those familiar with the matter. The Institute also reported that major fuel inventories grew by 11.4 million barrels. Data from the U.S. will be released on Wednesday. 

©2022 Bloomberg L.P.