By Barani Krishnan

Investing.com – Oil continued its relentless climb higher on Tuesday, helped by a deadly air raid on major producer UAE and  a robust consumption forecast from OPEC that left impending weekly U.S. inventory data as the last piece of the demand jigsaw puzzle.

On Sunday, the Iran-aligned Houthi movement used drone and missile attacks to set off blasts in fuel trucks in United Arab Emirates. Three people were killed. Abu Dhabi said it was ready to respond to the terrorist attacks.

OPEC, which stands for the Organization of the Petroleum Exporting Countries, meanwhile stuck to its forecast for robust growth in world oil demand in 2022 despite Covid’s Omicron variant and expected U.S. interest rate hikes. Long-term traders used this as leverage to push crude oil to the $90 per barrel mark, then eventually to $100.

The benchmark for U.S. crude settled  up $1.61, or 1.9%, at $85.43 per barrel for its highest close since October 2014. WTI has risen by 13% over the past year.

After a 7-year-high of $88.12, the London-traded Brent oil benchmark settled at $87.51 per barrel, up $1.03 or 1.2%. Brent, like WTI is at 13% for 2022.

Shortly after Omicron was discovered, crude oil prices lost 20%. These prices rose again after outages and underinvestment prevented some producers from OPEC from pumping at the permitted capacities. This was in violation of an agreement made between Russia, OPEC+ and other allies to increase 400,000 barrels each day.

“If current geopolitical tensions continue and OPEC+ members can’t deliver on their 400,000 barrel per day increase, macros coupled with the strong technical outlook could see prices push toward the $100 mark which is where the next (meaningful) technical resistance level lies,” Ash Glover at CMC Markets was quoted saying by Reuters.

Even so, some of this year’s rally in oil seems built on hype more than fact. According to the so-called tighter crude oil markets that have underpinned this rally, the peak in has reached 21 months after December’s holiday season when consumer consumption crashed. 

The U.S. Energy Information Administration’s weekly inventory update, which is due Thursday, will be the final piece in the demand puzzle for oil. Two weeks straight of large gasoline buildups have led to the EIA reporting a draw which may further assist longs on the market. 

However, even though the EIA may issue another negative dataset for oil, there is still a lot of upward momentum as Wall Street banks like Goldman Sachs and Bank of America (NYSE) continue to cheer from the sidelines in support of $90-and above crude.

“It’s a bull’s dream, what’s happening in crude oil now,” said John Kilduff, partner at New York-based energy hedge fund Again Capital. “The narrative we’re hearing about tight OPEC production is old news. The EIA gasoline number is the real news, but that has been ignored for two straight weeks now.”