Oil prices experienced on Thursday a slight increase, maintaining their position near four-month highs. This was attributed to a significant decrease in U.S. gasoline inventories and disruptive attacks on a crucial Russian fuel refinery, both of which indicated a tightening of fuel supplies.
The previous day, crude prices surged by over 3 percent, resulting in Brent and West Texas Intermediate crude futures reaching their highest levels since late November.
By 21:48 ET (01:48 GMT) on Thursday, Brent oil futures expiring in May rose by 0.2 percent to $84.21 per barrel, while WTI futures rose by 0.2 percent to $79.44 per barrel.
Read more: Oil surges as U.S. inventory draw exceeds expectations, OPEC forecasts strong demand
However, despite these considerable gains, crude prices remained within the $75 to $85 per barrel trading range that has been established in recent months. Concerns over weak Chinese demand and the possibility of higher interest rates for an extended period hindered further increases in oil prices.
Impact on Russia’s fuel production
A significant supporting factor for oil prices was the Ukrainian drone attacks on a major Russian fuel refinery, which reportedly rendered the facility inoperable. This action is expected to limit Russia’s fuel production and comes at a time when gasoline markets in the country are already experiencing tight conditions.
Earlier this month, Russia implemented a six-month ban on fuel exports, further tightening fuel markets across various parts of Asia. Escalated geopolitical risks in oil markets were also indicated by increased clashes with Ukraine, which occurred concurrently with the ongoing Israel-Hamas conflict.
Unexpected reduction in U.S. oil and gasoline inventories
An unexpected reduction in U.S. oil and gasoline inventories suggested an increase in demand from the world’s largest consumer of fuel after a period of decreased activity during the winter. This was particularly evident as more refineries resumed operations following an extended winter break.
Official data revealed that crude inventories decreased by approximately 1.5 million barrels during the week ending on March 8, contrary to expectations of a 0.9 million barrel increase.
Additionally, gasoline stocks experienced a noteworthy decline of 5.7 million barrels, surpassing expectations of a 1.9 million barrel reduction. This marked the fifth week out of the past six with significant decreases in gasoline inventories.
These inventory readings indicated a tightening of oil supplies in the U.S., despite the country’s record-high crude production and forecasts of increased production throughout the year.
The surge in crude prices on Wednesday coincided with the Organization of the Petroleum Exporting Countries (OPEC) stating its expectations of improved global oil demand in 2024 and 2025.
However, other data revealed that not all members of the cartel were fully committed to the group’s lower production targets, which are currently in effect until the end of June.
Crude prices were poised for further developments as cues on U.S. inflation, including producer price index and retail sales data, were expected to be released later in the day. Additionally, a monthly report from the International Energy Agency was scheduled for publication.
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