Oil markets experienced subtle yet significant movements on Thursday in Asia. Brent futures for May increased by 19 cents, a 0.23% increase, settling at $84.22 a barrel. Similarly, April’s US West Texas Intermediate (WTI) Crude climbed 15 cents, or 0.19%, to $79.87 per barrel. These adjustments reflect a broader trend of rising oil prices, which surged about 3% the day before, reaching a four-month peak. The momentum underscores a complex interplay of demand recovery, geopolitical concerns, and market speculations.
A critical factor behind the uptick is the notable decrease in US inventories. Gasoline stocks have dwindled to a three-month nadir, while crude reserves took an unexpected dive. Specifically, gasoline inventories continued their descent for the sixth week, plummeting by 5.7 million barrels to 234.1 million barrels—far surpassing the anticipated 1.9 million-barrel reduction. This drop has brought Gulf Coast motor fuel stocks to their lowest since November 2022. Concurrently, the demand for finished motor gasoline in the US has escalated, exceeding 9 million barrels per day for the first time this year, signifying a 30,000 barrel per day increase.
Geopolitical risks further exacerbate the situation. Ukrainian drone strikes targeting Russian refineries have continued for a second day, notably impacting Rosneft’s facility in Ryazan, among others. These assaults have caused significant disruptions, including fires and the shutdown of key refining units, tightening global supply. Meanwhile, February’s reports on oil production reveal that OPEC+ is struggling with compliance. Iraq’s persistent non-compliance and Nigeria’s production hitting a three-year high of 1.476 million bpd add complexity to the global oil supply dynamics.
In response to the tightening market, the US has announced a strategic petroleum reserve purchase of approximately 3.25 million barrels for August delivery. This move, alongside the ongoing geopolitical tensions and inventory challenges, hints at a cautious yet vigilant approach to managing domestic reserves and mitigating potential supply shocks.
The global energy market teeters, influenced by demand surges, inventory declines, geopolitical disruptions, and strategic reserve adjustments, affecting oil prices. Analysts and investors are closely monitoring these developments, understanding that the interplay of these factors will significantly shape the oil market’s trajectory in the coming months.
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