US Inventory Decline and Geopolitical Turmoil Drive International Oil Prices Up
International oil prices experienced their largest single-day rise in about five weeks as a result of a combination of factors including a decline in US crude oil inventories and heightened geopolitical tensions stemming from Ukraine’s attack on a Russian refinery.
WTI crude oil futures surged by 2.8% on Wednesday, reaching nearly $80 per barrel, while Brent crude oil futures remained stable near $84 per barrel after achieving their highest closing price in over four months.
The drop in US crude oil inventories, the first in seven weeks, and a decrease in crude oil supplies in Cushing, Oklahoma, contributed to the price rise. Additionally, geopolitical tensions escalated as Ukraine carried out another drone attack on a Russian oil refinery, specifically targeting Rosneft’s Ryazan plant near Moscow.
According to Neil Beveridge, a senior analyst at Sanford C. Bernstein & Co., OPEC’s production cuts are expected to help sustain the decline in inventories through the end of 2023 and into the first quarter of 2024, which will support oil prices. Beveridge also predicts that with demand projected to increase in 2024, Brent crude prices may reach around $80 a barrel.
Furthermore, the price of refined products has outpaced that of crude oil this year, with US gasoline futures reaching their highest level in nearly six months due to dwindling fuel inventories.
The combination of a decrease in US oil inventories, geopolitical tensions, and rising demand for refined products has driven international oil prices up and continues to keep the market on edge.