By Adedapo Adesanya
Brent crude jumped by 2.6 per cent or $2.11 to a four-month high of $84.03 per barrel on Wednesday on a surprise withdrawal in US crude inventories and potential supply disruptions after Ukrainian attacks on Russian refineries.
It was the highest level the crude grade had reached since November 6, as the US West Texas Intermediate (WTI) crude rose by 2.8 per cent or $2.16 to settle at $79.72 per barrel at midweek.
Prices went up after the Energy Information Administration (EIA) reported an estimated inventory draw of 1.5 million barrels for the week to March 8 compared with a crude oil inventory build of 1.4 million barrels for the previous week, with substantial declines in both gasoline and middle distillates for that week.
A day before the EIA released its report, the American Petroleum Institute (API) reported inventory draws across both crude and fuels, pushing oil prices higher on Tuesday.
A day before it released its weekly oil inventory report, the EIA revised its US oil production outlook in its Short-Term Energy Outlook, now expecting stronger growth than earlier. The EIA now expects production to add 260,000 barrels per day this year, for a total of 13.19 million barrels daily. That’s up from a modest 170,000 barrels per day growth projection earlier.
In Russia, Ukraine struck oil refineries in a second day of heavy drone attacks, causing a fire at Rosneft’s biggest refinery in what Russian President Vladimir Putin said was an attempt to disrupt his country’s presidential election this week.
Market analysts noted that as Russian refining capacity is damaged by Ukrainian drone strikes, this can result in Russia exporting less diesel fuel with a potential for Russia to start importing gasoline and that of course will affect prices around the world.
President Putin told the West that Russia was technically ready for nuclear war and that if the US sent troops to Ukraine, it would be considered a significant escalation of the conflict. He, however, also said he saw no need for the use of nuclear weapons in Ukraine.
The market also found support from sentiment that the latest data on US inflation will not derail interest rate cuts by June. Lower rates can boost economic growth and support oil demand.
The Organisation of the Petroleum Exporting Countries (OPEC), meanwhile, stuck to its forecast for oil demand growth of 2.25 million barrels per day in 2024, higher than many other forecasts.
