Oil Reaches Multi-Month Highs Amid Concerns Over Russian Supply.
U.S. West Texas Intermediate crude futures rose by 75 cents, or 0.9%, to settle at $83.47 per barrel, marking the highest level since October 27. Meanwhile, the global benchmark Brent crude settled 0.6% higher at $87.38 per barrel, reaching its highest point since October 31.
Ukraine has escalated its attacks on Russian oil infrastructure this year, targeting at least seven refineries with drones in the current month alone. These attacks have resulted in the closure of approximately 7%, or about 370,500 barrels per day, of Russian refining capacity, according to calculations by Reuters.
While reduced refining activity has led to increased exports of Russian crude oil, it could also prompt cuts in crude oil production due to storage limitations faced by the country, noted StoneX energy analyst Alex Hodes.
According to Hodes’ estimations, the strikes on Russian refineries could lead to a reduction of around 350,000 barrels per day in global petroleum supplies, potentially raising U.S. crude prices by $3 per barrel.
Even if the attacks do not directly diminish Russian crude supply, there remains a ripple effect on oil prices from the surge in refined product margins, highlighted SEB Research analyst Bjarne Schieldrop on Monday.
Oil prices found support from the decline in crude exports from Saudi Arabia and Iraq, alongside indications of stronger demand and economic growth in China and the United States.
The Commerce Department reported a sharp rebound in U.S. single-family homebuilding in February, which could bolster economic expansion, thereby supporting oil demand.
“Oil demand data is unexpectedly positive, and the extension of the voluntary OPEC+ cuts until the end of June has bolstered prices,” remarked UBS analyst Giovanni Staunovo.
Staunovo added, “Brent is likely to trade within a range of $80-90 per barrel this year, with a forecast of $86 per barrel by the end of June.”
Related Posts
Market sources, citing figures from the American Petroleum Institute, indicated a decline of 1.5 million barrels in U.S. crude oil stocks for the week ending March 15. A Reuters poll of analysts had anticipated an increase of around 10,000 barrels in stocks last week.
Official stockpile data from the U.S. Energy Information Administration is scheduled for release at 10:30 a.m. ET (1430 GMT) on Wednesday.
