Oil jumps on surprise US inventories drop

14 Mar 2024 , 10:10 AM

Thursday’s oil gains in Asian trade continued after a surprising decline in US crude stockpiles suggested that demand was growing. Prices were further supported by the possibility of supply disruptions as a result of Ukrainian strikes on Russian refineries.

U.S. West Texas Intermediate (WTI) oil was up 7 cents, or 0.9%, at $79.79 per barrel, while Brent futures were up by 10 cents, or 0.12%, to $84.13 a barrel.

A four-month high was reached by both contracts on Wednesday, up around 3% because of increased geopolitical risk and an improved forecast for U.S. demand.

One of the most significant attacks on Russia’s energy sector in recent months, the second day of Ukrainian drone strikes on Russian refining facilities resulted in a fire at Rosneft’s largest refinery.

According to Russian officials, Ukraine targeted refineries in the Rostov and Ryazan areas on Tuesday after severely destroying Lukoil’s facility in Nizhny Novgorod.

A drone strike in Ryazan resulted in a fire at Rosneft’s facility. The refinery was obliged to shut down two of its main facilities for refining oil, according to a Reuters report.

In an interview with state media on Wednesday, Russian President Vladimir Putin declared that his country was technically prepared for nuclear war.

The Energy Information Administration (EIA) reported on Wednesday that due to robust demand ahead of the summer driving season, U.S. crude oil stockpiles unexpectedly reduced as processing accelerated and gasoline inventories plummeted.

In contrast to analysts’ predictions in a Reuters poll for a 1.3 million barrel increase, crude stockpiles fell by 1.5 million barrels to 447 million barrels in the week ended March 8, the EIA reported. This marked the end of six straight weeks of rises in crude inventories.

According to the EIA, petrol inventories dropped for a sixth consecutive week, dropping by 5.7 million barrels to 234.1 million barrels, which was treble the predicted draw of 1.9 million barrels.

The United States Gulf Coast’s motor fuel reserves reached their lowest point since November 2022, while the amount of completed motor petrol supplied—a good indicator of demand—rose by 30,000 barrels per day to exceed 9 million barrels per day for the first time this year.

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