By Adedapo Adesanya
The two major crude oil grades, Brent and the US West Texas Intermediate (WTI), traded at their highest in six months on Wednesday as investors worried about supply disruptions from a worsening geopolitical landscape despite a jump in US crude oil inventories.
While Brent gained 43 cents or 0.5 per cent to settle at $89.35 a barrel, WTI appreciated by cents or 0.3 per cent to $85.43 a barrel.
Crude oil prices were up after the Energy Information Administration (EIA) reported an inventory build of 3.2 million barrels for the last week of March. The authority also estimated draws in both gasoline (petrol) and middle distillates.
In the preceding week, there was an oil inventory build of 3.2 million, which pushed prices lower at the time.
What was announced yesterday was in contrast to the an inventory draw of 2.3 million barrels estimated by the American Petroleum Institute (API) earlier this week.
Gasoline inventories, however, shed 4.3 million barrels in the week to March 29, with production averaging 10 million barrels per day. These figures compared with an inventory build of 1.3 million barrels for the previous week, when production stood at an average of 9.2 million barrels daily.
In middle distillates, the EIA reported an inventory decline of 1.3 million barrels for the last week of March, with production averaging 4.6 million barrels per day.
Ukrainian drone attacks on Russian refineries continued fueling concern about global fuel supply security and Iran vowed to take revenge on Israel for the strike on its consulate that killed five.
Prices were also supported by potential widening of the conflict in the Middle East with analysts wary of Iran’s response to Israel attacks. Iran, which provides support for the Hamas militia fighting Israel in Gaza, had vowed revenge against Israel for an attack on Monday that killed high-ranking military personnel.
The Organisation of the Petroleum Exporting Countries and its allies (OPEC+) is set to continue with its production cuts until at least the end of the first half of 2024 as the alliance’s Joint Ministerial Monitoring Committee (JMMC) did not recommend any changes to output policy at its meeting on Wednesday.
The JMMC is the OPEC+ panel that monitors the situation in the oil market and assesses compliance with the cuts. It doesn’t take decisions on policy as it just recommends possible actions to the full OPEC+ ministerial meetings.
After a short regular meeting today, the panel did not recommend to the OPEC+ ministers any change to the current levels of production, as widely expected.
The panel’s next meeting is scheduled to be held on June 1, ahead of a planned full OPEC and OPEC+ ministerial meetings, which are expected to decide whether to proceed with the current level of cuts beyond June or reverse some of the reductions.