Oil prices continue to rise as supply concerns affect the market

Oil prices continue to rise as supply concerns affect the market

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Oil prices extended gains on Wednesday, as a larger-than-expected decline in US crude inventories and escalating geopolitical tension raised investor concerns about tight supplies.

Brent crude futures for June delivery rose 20 cents, or 0.22%, to $89.12 per barrel, while US West Texas Intermediate crude futures for May delivery rose 17 cents, or 0.2%, to $85.32 per barrel, by 03:00 GMT.

Brent and Texas crude oil rose to their highest levels since October the day before, and US crude oil inventories fell by 2.3 million barrels last week, exceeding analysts’ expectations in a Reuters poll of a decline of 1.5 million barrels. US government data is scheduled to be released later on Wednesday.

On the geopolitical front, a Ukrainian drone bombed one of Russia’s largest refineries in an attack that Russia initially said it repelled. Russia is facing attacks from Ukraine on oil refineries and has also attacked energy infrastructure in Kiev, and Moscow is one of the 3 largest oil producers in the world.

Elsewhere, Iran said it would retaliate against Israel for the air strike that killed 2 of its generals and 5 of its military advisors at its embassy compound in Damascus, raising the risk of further escalation in the conflict in the Middle East.

Also in a reduction in supplies, an internal document seen by Reuters showed that Mexican state energy company Pemex asked its trading unit to cancel up to 436,000 barrels per day of crude exports this month as it prepares to process domestic oil at the new Dos Bocas refinery.

But 5 OPEC+ sources told Reuters that a ministerial committee affiliated with the bloc is unlikely to recommend any changes in oil production policy at its meeting on Wednesday. The dollar also fell against a basket of currencies today, which helped support demand for commodities in which it is denominated, such as oil.

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