Oil prices rose for a second session on Thursday, supported by US sanctions on Russia, a bigger-than-expected draw in US crude inventories, improving global demand outlook and supply concerns.
Brent crude futures rose 25 cents, or 0.3%, to $82.28 a barrel by 0446 GMT, after rising 2.6% in the previous session to reach their highest level since July 26 last year.
WTI Crude futures rose 28 cents, or 0.4%, to $80.32 a barrel after rising 3.3% on Wednesday to reach their highest level since July 19.
The Energy Information Administration (EIA) said on Wednesday that U.S. crude inventories fell to their lowest level since April 2022 last week as exports rose and imports fell.
The 2 million-barrel drop exceeded analysts’ expectations for a 992,000-barrel drop. The decline added to tightening global supplies after the U.S. imposed broader sanctions on Russian oil producers and tankers.
On Wednesday, the Biden administration imposed hundreds of additional sanctions on Russia, targeting its military-industrial strength and sanction evasion plans. The new U.S. sanctions have prompted Moscow’s most important customers to find new transportation channels, while shipping costs have increased.
OPEC+ has been collectively restricting production for the past two years and the group will be cautious about increasing supply despite the recent price rally. Members have lost optimism so often in the past year that caution is likely before they begin the process of easing the cuts.
In a positive development in the Far East, Israel, and Hamas have reached an agreement to halt the fighting in Gaza by swapping Israeli hostages for Palestinian prisoners. The news may settle some of the supply concerns.
On the demand side, global oil rose by 1.2 million bpd in the first two weeks of 2025 from the same period a year ago, slightly below expectations.
Analysts expect oil demand to rise by 1.4 million bpd on an annual basis in the coming weeks as travel increases due to celebrations in India and China.
Some investors expect the US Federal Reserve to cut interest rates before the end of the year after data on easing core inflation in the US provide support for economic activity and energy consumption.