Brent crude oil prices rose to $90 a barrel on Wednesday as low Cushing and distillate inventories combine with supply jitters in Europe, Russian-Ukrainian tensions and falling Russian crude imports shipping from the Baltic countries.
As of 11:00 a.m. EST Wednesday, even after the EIA’s weekly U.S. inventory report showed an increase in crude oil inventories, WTI crude prices rose 1.96% to $87.27, while that Brent Crude briefly hit $90, up nearly 2% on the day.
Brent crude hit its highest level since 2014 as stocks at the Cushing hub in Oklahoma – the delivery point for WTI – sank another million barrels on Tuesday, API data showed. at the lowest point since 2012 – more than 30% below the five-year average.
According to EIA data, distillate inventories also saw a steep decline of 2.8 million barrels, pushing inventories to their lowest level in 2014.
In addition to US fundamentals, tension between the West and Russia over Ukraine continues to push prices higher.
On Tuesday, US President Joe Biden notedcommenting on the Russian-Ukrainian crisis: “I made it clear to President Putin that if he were to move to Ukraine, there would be serious consequences, including significant economic sanctions, as well as I feel compelled to strengthen our presence — NATO’s presence in — on the eastern front: Poland, Romania, etc.
Fears that sanctions against Russia could cause a shortage of crude oil and natural gas have rattled commodity markets in recent days.
The final upward pressure in this oil price scenario is Russia’s exports from its Baltic Sea ports, which are expected to fall next month to the lowest level in five months. The concern here is that Russia is unable to increase crude oil production as much as its OPEC+ deal has allowed.
By Julianne Geiger for Oilprice.com
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