U.S. oil futures surged to their highest levels in more than a year on Thursday due to a drop in crude stocks in the United States, adding to concerns about tight global supplies resulting from OPEC+ output cuts.
U.S. West Texas Intermediate crude futures (WTI) rose by 85 cents to reach $94.53 a barrel by 0649 GMT, surpassing $95 earlier in the session for the first time since August 2022.
Brent crude futures increased by 78 cents, equivalent to 0.8%, reaching $97.33 a barrel, marking levels not witnessed since November.
According to Stefano Grasso, a senior portfolio manager at 8VantEdge in Singapore, the oil market is quickly realizing the profound impact of the OPEC+ cuts that were announced in the summer on crude availability. He added that stocks are diminishing while demand continues to grow.
The reduction in crude stocks follows production cuts of 1.3 million barrels per day through the end of the year, implemented by Saudi Arabia, the Organization of the Petroleum Exporting Countries (OPEC), Russia, and other allies forming the OPEC+ coalition.
Meanwhile, Putin ordered his government to ensure stability in retail fuel prices following a surge caused by an increase in exports.
Sugandha Sachdeva, Executive Director and Chief Strategist at Acme Investment Advisors, suggests that the narrative of higher interest rates in the U.S. for an extended period might dampen enthusiasm and could potentially restrain prices.