Roslan Khasawneh and Naveen Thukral

SINGAPORE (Reuters – Oil fell Thursday, as investors took profit from a monthlong rally. But strong demand continues to support prices near their highs since the end of 2014.

Futures dropped 49 cents or 0.6% to $87.95 per barrel at 0740 GMT. This was after they had fallen more than $1. On Wednesday, the global benchmark rose to $89.17 per barrel. This is its highest level since October 2014.

U.S. West Texas Intermediate crude futures were at $86.90 per barrel for February delivery. This was a drop of 0.1% or 6 cents. WTI rose to $87.91, its highest level since October 2014.

On Thursday, the February WTI contract expires. The most active contract for March delivery is $85.41 per barrel. This 0.5% decrease from its previous high of $85.41.

Analysts at ANZ Bank stated in a note that the International Energy Agency had said that global oil demand was on track to reach pre-pandemic levels.

Markets can also be tightened by short-term disruptions in supply. Brent crude oil rose sharply following reports that a major pipeline connecting Iraq and Turkey was damaged by an explosion.

Officials confirmed that the crude oil flowing through the Kirkuk/Ceyhan pipeline was resumed after it was stopped on Tuesday because of a blast at the pipeline near Kahramanmaras in the southeast Turkish province.

After the Houthi rebel group in Yemen attacked the United Arab Emirates (OPEC), the third largest producer of oil, supply concerns are growing. Russia is the second largest oil producer in the world, and has been building up troops near Ukraine’s borders, fueling fears about invasions, as well as supply uncertainty.

Oil prices are supported by the large post-coronavirus recovery in fuel demand.

According to analysts and officials of OPEC, an oil rally could continue over the next few months. Prices could reach $100 a barrel if there is less demand due to the Omicron COVID-19 variation.

OPEC+ is a cartel that includes Russia and other producers. It has been struggling to reach a target for a monthly increase of 400,000 barrels per daily (bpd).

According to reports cited by market sources, gasoline inventories rose and distillate inventories declined last week.

For the week ending Jan. 14, crude oil stocks increased by 1.4million barrels. Sources who spoke under anonymity said that gasoline inventories rose by 3.55 million barrels. However, distillate stocks dropped by 1.2 Million barrels.