WTI oil rose nearly $1 a barrel on Thursday to its highest level in more than a year, as a sharp decline in U.S. crude inventories raised concerns that global supplies will tighten due to OPEC+ cuts led by Saudi Arabia.
Brent crude futures rose 77 cents, or 0.8%, to $97.32 a barrel by 0145 GMT, after reaching levels not seen since November.
West Texas Intermediate crude oil futures (WTI) led the rise, rising above $95 for the first time since August last year. WTI was up 92 cents, or 1%, at $94.60 a barrel.
The oil market is palpably acknowledging the fact that the OPEC+ cuts announced in the summer have had a profound impact on crude oil supplies. While demand is increasing, oil stocks are declining. It is believed that we are still far from a price level that will reduce demand.
Government data showed US crude stocks fell 2.2 million barrels last week to 416.3 million barrels; This was well above the 320,000-barrel decline analysts expected.
Crude inventories at Cushing, the storage hub that is the delivery point for U.S. crude futures, fell by 943,000 barrels in the week to just under 22 million barrels, the lowest level since July 2022, the data showed. Inventories are nearing historic lows due to strong refining and export demand, raising concerns about the quality of oil remaining in the hub and whether it will fall below minimum operating levels.
The intense crude oil withdrawals came after the Organization of Petroleum Exporting Countries’ production cuts of 1.3 million barrels per day by Saudi Arabia and Russia by the end of the year. The group will meet on October 4 to review the markets.
As oil prices continue to move higher in the short term, the likelihood of a reduction in current supply disruptions is expected to increase.
Saudi Arabia’s goal is much higher prices, and if cutting production by 10% gives them a 30% price increase, they may not hesitate to do so.
President Vladimir Putin has ordered his government to ensure the stabilization of retail fuel prices following a jump caused by an increase in exports. In response, methods are being tried to restrict the export of petroleum products needed for domestic use.