By Roslan Khasawneh

SINGAPORE, (Reuters) – Oil prices fell on Thursday due to weak U.S. payrolls data. However, tight supplies kept them underpinned as OPEC+ producers remained committed to moderate production increases.

The price per barrel dropped 37 cents (0.4%) to $89.10 at 0127 GMT on Thursday, following a rise of 31 cents on Wednesday. U.S. West Texas Intermediate crude oil was 0.6% lower at $87.72 per barrel after rising 6 cents on Wednesday.

According to Howie Lee (economist at OCBC Singapore), “This morning’s dip could be a consequence of the shockingly high U.S. ADP Employment print last night. But we believe that the supply squeeze might drive oil prices higher throughout this year.”

In January 2017, the U.S. Private Payrolls declined for the first year, which raises the possibility of a sudden decline in employment. It would be a short-term setback in the labour market.

However, oil prices have increased by 15% this year due to tight supplies worldwide and geopolitical tensions between East Europe and the Middle East. Crude benchmarks reached their highest price since October 2014 on Wednesday, rising as high as $89.72 and Brent reaching $91.70 respectively on Friday.

Late Wednesday, prices were under pressure after Iran’s Oil Ministry said that the country is ready to get back on the oil market quickly but gave few details.

Edward Moya is a senior analyst with OANDA. He stated, “The oil market doesn’t really look any closer to seeing more barrels of crude but we don’t see any new catalysts to push prices up to fresh highs.”

The Organization of the Petroleum Exporting Countries (OPEC+) and its allies, led by Russia, agreed Wednesday to maintain moderate increases of 400,000 barrels per daily (bpd), in their oil production. This is despite the fact that the organization has been struggling to achieve existing targets, and despite the pressure of top buyers to increase output faster.

Moya stated that “OPEC+” will help to save more oil than expected for prices above $100 a barrel.

According to the group, rising prices were due to insufficient investment by consuming countries as they transition to cleaner energy. Several OPEC+ sources said that prices have been pushed higher because of tensions between Russia and America.

In a report, the OPEC+ Joint Technical Committee stated that they expect that 2022’s overall surplus will reach 1.3million bpd. This is slightly lower than their previous forecast of 1.4million bpd.

The U.S. Energy Information Administration reported that crude oil stocks fell 1 million barrels in the last week. This was against all expectations. Distillate inventories, however, also declined due to strong domestic and export demand. [EIA/S]

A major winter storm, which is forecast to batter much of the United States, will bring snow and freezing rain to Northeastern areas, keeping the prices low. It comes just days after an extremely severe winter storm and may increase oil prices, particularly as certain regions will substitute where there is less.