Oil held near 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 held near 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 traded above $81 a barrel after rallying by 2.2% on Tuesday. 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.”
The price gain on Tuesday came ahead of US consumer price data that will shape investors’ expectations for the Federal Reserve’s next move, and appetite for risk.
WTI’s prompt spread — the difference between its two nearest contracts — affirms that the oil market is tightening. It has swung to 7 cents a barrel in backwardation, the widest this year on a closing basis.
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