BENGALURU: Crude prices rose by more than $1 a barrel on Friday on growing evidence of supply shortages in the coming months and rising tensions between Russia and Ukraine that could hit supplies further.
North Sea Brent crude futures rose $1.43, or 1.8%, to settle at $81.07 a barrel. US West Texas Intermediate crude futures rose $1.42, or 1.9%, to $77.07 a barrel, the highest since April 25.
“Oil markets are entering a fourth week of price gains and are slowly starting to price in an impending supply crunch,” said Phil Flynn, an analyst at Price Futures Group.
“Global supply is starting to tighten, and that could accelerate dramatically in the coming weeks,” Flynn said. “The rising risk of war could also affect prices.”
Russia on Friday conducted a fourth straight day of attacks on Ukrainian food export facilities and practiced seizing ships in the Black Sea, amid heightened regional tensions since Russia pulled out of a UN-brokered Safe Seas Corridor deal this week.
U.S. crude inventories are declining as crude oil exports surge and refinery utilization rates rise, the Energy Information Administration (EIA) said Wednesday. The EIA said earlier Monday that U.S. oil and gas production in August was likely to fall for the first time this year, adding to concerns about supply tightness.
Separately on Friday, United Arab Emirates Energy Minister Suhail Almazrouei told Reuters that current actions by OPEC+ to support oil markets were sufficient for now and that if further steps were needed, the group was “one phone call away”.
Investors, meanwhile, welcomed stimulus measures aimed at revitalizing China’s faltering economy. Data from the world’s second largest oil consumer suggests that the government’s 5% annual growth target will not be met.
Chinese authorities on Friday announced plans to help promote sales of cars and electronics.
“We estimate the 2024 oil supply-demand balance to be in the range of $75 to $95, as limited OPEC+ supply and strong U.S. demand are partially offset by lower-than-expected demand as China’s economic recovery continues to lag,” said Jay Hatfield, chief executive officer of Infrastructure Capital Management.
Rob Howarth, senior investment strategist at U.S. Bank Asset Management, said next week’s S&P Global Purchasing Managers Preliminary Survey will be key for investors trying to understand changes in global demand.
