Oil prices extended their gains on Friday and were set for a strong weekly increase as falling inventories of U.S. gasoline and distillate raised expectations of solid demand and concerns grew over supply disruptions in Russia.
Brent crude fell a marginal 0.03 percent to $76.46 per barrel as of 5:08 GMT, while West Texas Intermediate (WTI) crude gained 0.44 percent to $72.57 per barrel. Both benchmarks were set for a weekly gain of about 3 percent.
U.S. crude oil stockpiles rise
The Energy Information Administration reported on Thursday that U.S. crude oil stockpiles rose, while gasoline and distillate inventories fell last week. This, along with concerns over supply disruptions in Russia, acted as a tailwind for prices this week.
In addition, hopes for a peace deal between Russia and Ukraine seem to have faded in the wake of intensifying Ukrainian drone attacks on Russian oil pumping stations.
Earlier this week, Ukraine President Volodymyr Zelenskiy was enraged by U.S. and Russian moves to negotiate a peace deal without Kyiv and comments by U.S. President Donald Trump blaming Ukraine for starting the three-year-old conflict with Moscow. However, following a meeting with Trump’s envoy for the Ukraine conflict on Thursday, Zelenskiy said Ukraine was ready to quickly produce a strong agreement on investments and security with the United States.
Supply disruptions persist
Meanwhile, disruptions to oil supply continued to keep prices high. This week, oil prices witnessed an 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 said Caspian Pipeline Consortium oil flows, a major route for crude exports from Kazakhstan, declined by 30-40 percent on Tuesday after a Ukraine drone attack on a pumping station. Still, Kazakhstan has pumped record-high oil volumes despite damage to its main export route via Russia, the Caspian Pipeline Consortium, industry sources said on Thursday.
Adding to the disruption worries, it was reported on Tuesday that loading operations at Russia’s Novorossiysk port on the Black Sea were halted due to a storm.
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Trade war concerns persist
In addition to the higher U.S. inventories, import tariffs announced by the Trump administration could impact oil prices by raising the cost of consumer goods, weakening the global economy and reducing fuel demand. Furthermore, concerns about European and Chinese demand persisted, raising caution among traders.
Investors are concerned about the global economic outlook as the U.S. president dismantles the nation’s free-trade structure with plans to impose 25 percent tariffs on car imports to the U.S. In the Middle East, further easing in geopolitical tensions could also weigh on oil prices by reducing the risk of further supply disruption.
