Oil prices saw a slight increase on Wednesday, building on gains from the previous session, as concerns over supply disruptions following a Ukrainian drone attack on a Russian crude-pumping station continued to boost market sentiment. Brent Oil Futures climbed 0.3 percent to $76.04 per barrel as of 20:48 ET (01:48 GMT), while West Texas Intermediate (WTI) crude futures also experienced a 0.3 percent rise, reaching $72.03 per barrel.
Supply disruption fears support prices, U.S.-Russia talks in focus
The previous session had already witnessed a price increase after Ukrainian drone strikes targeted a crucial Russian crude-pumping station, leading to supply disruptions from Kazakhstan. This attack has reignited anxieties about potential further supply interruptions in a market that is already dealing with tight inventories. Russia reported a significant decline in crude shipments through the Caspian Pipeline Consortium (CPC), a vital export route for Kazakhstan’s oil, which fell by 30 percent to 40 percent on Tuesday following the drone assault. A Reuters estimation indicated that a 30 percent reduction would result in the elimination of about 380,000 barrels per day from the global supply.
Adding to the disruption worries, it was reported on Tuesday by Reuters that loading operations at Russia’s Novorossiysk port on the Black Sea were halted due to a storm. Compounding the market’s focus, high-ranking officials from the United States and Russia recently convened in Riyadh, Saudi Arabia, for initial discussions regarding the ongoing war in Ukraine. While these talks are still in the nascent stages, any advancements toward a peace agreement could potentially lead to the lifting of sanctions on Russian oil exports, which might increase global supply and place downward pressure on prices.
Read more: Oil prices drop 0.2 percent to $75.10 as OPEC+ considers output delays
U.S. data in focus to gauge demand, rate outlook
However, gains in oil prices were limited by a cautious market sentiment ahead of significant U.S. economic data releases and the latest minutes from the Federal Reserve’s meeting, which could offer insights into the outlook for oil demand and interest rates. Traders and analysts are eagerly anticipating the upcoming U.S. Purchasing Managers’ Index (PMI) data, expected later this week, which will shed light on the health of the world’s largest economy and its implications for oil demand.
In addition, the minutes from the Federal Open Market Committee (FOMC) meeting, scheduled for release later on Wednesday, will be meticulously examined for indications regarding the U.S. interest rate outlook. Should interest rates rise, this could strengthen the dollar, putting additional pressure on oil prices by making crude more expensive for holders of other currencies.
