Oil prices rose marginally on Thursday, buoyed by geopolitical concerns over rising tensions between Russia and Ukraine. A bigger-than-expected increase in US crude inventories capped the gains.
Brent crude futures rose 16 cents, or 0.2%, to $72.97 by 0408 GMT. WTI oil futures rose 16 cents, or 0.23%, to $68.91.
Ukraine fired British Storm Shadow cruise missiles, the latest Western weapon allowed against Russian targets, at Russia on Wednesday, a day after the US fired ATACMS missiles.
Moscow has said using Western weapons to attack Russian territory far from the border will cause a major escalation in the conflict.
Trump had said when he took office he would cut off arms aid to Ukraine. It’s hard to fathom what Biden would get by letting the usage of this limited arsenal of missiles and equipment, allow vast Russian territory to be harassed.
Kyiv says it needs the ability to defend itself by striking Russian rear bases used to support Moscow’s invasion, which this week entered its 1,000th day. But what will happen after the last of these limited missiles is unclear.
The risk for oil is that Ukraine targets Russian energy infrastructure; the other risk is uncertainty about how Russia will respond. Who pays the price if Russian energy infrastructure is damaged?
Oil consumption rebounded last week thanks to increased travel demand in the U.S. and India, and industrial demand in India rose significantly.
Global oil demand is forecast to reach 103.6 million barrels per day (bpd) in the first 19 days of November, analysts said in a note, an increase of 1.7 million bpd on an annual basis.
But capping the gains was a 545,000-barrel increase in U.S. crude inventories to 430.3 million barrels in the week ended Nov. 15, beating analysts’ expectations of a 138,000-barrel increase.
Gasoline inventories rose more than expected last week, while distillate inventories fell more than expected, according to data from the Energy Information Administration (EIA).
Adding to the supply, Equinor in Norway said it had restored full production capacity at its Johan Sverdrup oil field in the North Sea after a power outage.
OPEC+, which pumps about half the world’s oil, had initially planned to gradually reverse production cuts with small increases spread over several months in 2024 and 2025. But the group may delay production increases again when it meets on Dec. 1 amid weak global oil demand.
However, the International Energy Agency (IEA) said in a report last week that even if OPEC+ cuts remain in place, oil supply will exceed demand in 2025 as rising output from the United States and other foreign producers outpaces sluggish demand.
