Energy is shining again as Brent and WTI crude oil prices hit multi-month highs on growing concerns over global supply tightening, the increased geopolitical risk, and the drawdowns in the U.S. fuel stockpiles.
The international crude oil benchmark Brent gained 1% to $88/b on Thursday morning, posting its highest level since January 2023, while WTI price rose as high as $85/b, recording its highest since November 2022.
Both contracts are ready to set their seventh consecutive weekly gains this week, the longest winning streak from December 2021 to January 2022.
Brent crude oil, Daily chart
Investors have been turned net buyers of crude oil prices since the end of June, given the steep voluntary output cuts from top oil producers and exporters Saudi Arabia and the group’s ally Russia, that drain global oil inventories.
OPEC’s de facto leader Saudi Arabia decided to extend its voluntary production cut of 1 million barrels per day for another month to the end of September, falling its production to around 9 million bpd, while Russia also said it would cut oil exports by 300,000 bpd in the same month.
Surging geopolitical risk also adds a premium on the crude oil prices, following the recent naval drone attack on warships on Russia's Black Sea navy base at Novorossiysk, a key port that handles 2% of the world's oil supply (exports from Russia and Kazakhstan).
The prices of the U.S-based WTI crude oil were also supported by U.S. ΕΙΑ-Energy Information Administration data on Wednesday that showed that U.S. gasoline inventories fell by 2.7 million barrels last week, and distillate inventories, which include diesel and heating oil, dropped by 1.7 million barrels. https://www.eia.gov/petroleum/supply/weekly/
In contrast, the U.S. crude inventories rose by 5.9 million barrels in the last week to 445.6 million barrels, compared with analysts' expectations in a Reuters poll for a 0.6-million-barrel rise. https://www.investing.com/news/commodities-news/oil-prices-fall-as-china-woes-offset-boost-from-high-us-fuel-demand-3150573
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