LONDON—Oil prices climbed on Wednesday toward last week's seven-year highs as a draw in U.S. crude stocks confirmed strong demand and tight supplies, but investors remained cautious ahead of an OPEC+ meeting later in the day.
Brent crude rose 23 cents, or 0.26 percent, to $89.39 a barrel by 1050 GMT, after easing 10 cents on Tuesday.
U.S. West Texas Intermediate crude was up 34 cents, or 0.39 percent, at $88.54 a barrel.
Tight global supplies and geopolitical tensions in Eastern Europe and the Middle East have boosted oil prices by about 15 percent so far this year. On Friday, crude benchmarks hit their highest prices since October 2014, with Brent touching $91.70 and U.S. crude hitting $88.84.
"I think the 400,000 barrel per day increase (from OPEC+) is priced in, which, judging by recent compliance figures will be less than that due to output constraints," Tamas Varga, analyst at PVM Oil Associates, said, adding that cold weather in the United States should also support prices.
"Bearish EIA statistics this afternoon might be used as an excuse for profit-taking. Unless the weather warms and Ukraine tensions are settled, oil should remain supported."
A major winter storm is expected to wallop much of the central United States and stretch to parts of the Northeast this week, bringing heavy snow, freezing rain, and ice, the National Weather Service said on Monday. The storm comes days after a deadly winter blast.
Goldman Sachs said there was a chance the oil market's rally would prompt a faster ramp-up.
"If Saudi and Russia show any signs of raising their production to shoulder shortfalls of some members who cannot meet their output targets, oil prices will likely fall," said Tetsu Emori, CEO of Emori Fund Management Inc.
"But if there are no such surprises, the market is expected to keep a bullish trend as demand is recovering and geopolitical tensions linger," he said.
Tensions between Russia and the West also underpinned crude prices. Russia, the world's second-largest oil producer, and the West have been at loggerheads over Ukraine, fanning fears that energy supplies to Europe could be disrupted.
On Tuesday, Russian President Vladimir Putin accused the West of deliberately creating a scenario designed to lure it into war and ignoring Russia's security concerns over Ukraine.