Oil prices edge higher on worries over tighter supply

Oil prices edged up early on Tuesday, extending gains from the previous session as investors worried about tight supply ahead of the winter heating season in the Northern Hemisphere.

Brent crude rose 5 cents to $94.05 a barrel by 0006 GMT, while WTI crude rose 7 cents to $87.85 a barrel.

Crude prices on both sides of the Atlantic have surged more than 15 percent this year due to uncertainties stemming from the Russia-Ukraine conflict. Energy costs have also soared with Moscow slashing gas supplies to Europe amid Western sanctions imposed over its invasion of its neighbor.

Fossil fuel firms may have to share their excess profits to help European households and industries cope with red-hot energy bills, a draft European Union plan shows, as the cost of the West’s “energy war” with Russia took a growing toll.

In the United States, emergency oil stocks fell 8.4 million barrels to 434.1 million barrels in the week ended Sept. 9, the lowest level since October 1984, according to data released on Monday by the U.S. Department of Energy (DOE).

U.S. President Joe Biden in March set a plan to release 1 million barrels per day over six months from the Strategic Petroleum Reserve (SPR) to tackle high U.S. fuel prices, which have contributed to soaring inflation.

The Biden administration is weighing the need for further SPR releases after the current program ends in October, Energy Secretary Jennifer Granholm told Reuters last week.

Meanwhile, the G7 nations will implement a price cap on Russian oil to limit the country’s oil export revenue, seeking to punish Moscow over the invasion of Ukraine, while taking measures to ensure that oil could still flow to emerging nations.

The U.S. Treasury, however, warned the cap could send oil and U.S. gasoline prices even higher this winter.