Oil rose from the highest closing level since January as slowing flows from Russia, production cuts by OPEC+ and falling US inventories pointed to a tightening market.
(Bloomberg) — Oil rose from the highest closing level since January as slowing flows from Russia, production cuts by OPEC+ and falling US inventories pointed to a tightening market.
West Texas Intermediate climbed above $82 a barrel, building on Tuesday’s 2.2% gain, as the dollar weakened after US inflation showed hints of moderating in March. Russian shipments slid below 3 million barrels a day for the first time in eight weeks, after Moscow vowed to reduce production in retaliation for international sanctions, tanker-tracking data show.
In the US, crude stockpiles at the national storage hub in Cushing, Oklahoma, fell by 1.4 million barrels last week, according to people familiar with data from the industry-funded American Petroleum Institute. If confirmed by government figures later on Wednesday, that would be a sixth consecutive drawdown.
Crude has rebounded from a 15-month low seen in March after the Organization of Petroleum Exporting Countries and its allies cut output, US crude holdings declined, and traders stuck to the view that Chinese demand will pick up. In the Middle East, pipeline flows from Iraq’s semi-autonomous Kurdistan region remain halted.
“The petro-nations’ somewhat surprising supply cut last week triggered a shift in sentiment,” said Norbert Ruecker, head of economics at Julius Baer Group Ltd. in Zurich. “Beyond the geopolitical noise, the ongoing fundamental trends seem robust.”
Oil extended gains as the dollar eased following Wednesday’s inflation data.
The overall consumer price index edged up 0.1% in March, according to data out Wednesday from the Bureau of Labor Statistics, compared with an expected increase of 0.2%. The Bloomberg Dollar Spot Index dropped 0.5%, bolstering the appeal of dollar-priced commodities.
WTI’s prompt spread — the difference between its two nearest contracts — affirms that the oil market is tightening. It has swung to 8 cents a barrel in backwardation, the widest this year on a closing basis.
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