Crude oil gained more than 1% early on Wednesday, propelled by continuously high demand for the commodity.

March Brent futures increased by 1.14% to $88.51 per barrel, while March WTI futures rose by 1.24% to $85.88 per barrel. The price of Brent crude oil went up above $89 for the first time since mid-autumn 2014, pushing new highs for a second straight day.

At the end of Tuesday's trading session, Brent gained 2.7% and WTI increased by 2.9%. Brent futures began their uptrend at the end of last week, rising to $88.13 on Tuesday. The key oil benchmark increased by 19% over the past month.

Market players are focusing on yesterday's report by the OPEC. According to the report, commercial stockpiles of crude oil in OECD countries were below a 5-year average by 247 million barrels.

Worldwide demand for crude oil could be stable in the near future, despite the spread of the new Omicron strain of COVID-19. Omicron is believed to be less severe than Delta, leading to a much lower risk of lockdowns and giving some optimism to market players.

Reports of drone attacks in the United Arab Emirates, OPEC's third biggest oil producer, are also pushing up the price of oil. On Monday, drones launched by Houthi rebels struck three fuel tanks at ADNOC's Mussafah fuel depot, killing 4 people. Abu Dhabi's airport extension infrastructure was also hit.

Another geopolitical factor fuelling the oil rally is the ongoing tensions between Russia and NATO over the alliance's expansion in Eastern Europe. Investors are pricing in a full recovery of oil demand at the end of the year, as market players ignore the possible impact of Omicron on demand.

The commodity market is boosted by high inflation in the US. December's inflation data did not match forecasts, pushing up the price of crude oil.

It remains unclear whether the ongoing oil rally would last. Once geopolitical tensions ease, the commodity market could be influenced by fundamental factors, such as the COVID-19 pandemic and China's quarantine measures after the Winter Olympics in Beijing.

Crude oil's upside potential could be diminished by increased oil production. In this scenario, Brent would fail to reach $88-$90 and would likely remain near last year's level of $70 throughout 2022.