Get 40% Off
🚀 Our AI Picked 6 Stocks that Jumped +25% in Q1. Which Picks Will Soar in Q2?Unlock full list

Oil settles at 5-month high, gains capped by jump in US crude stocks

Published 03/04/2024, 01:52
Updated 03/04/2024, 23:17
© Reuters. FILE PHOTO: A view of the newly commissioned Dangote oil refinery is pictured in Ibeju-Lekki, Lagos, Nigeria, May 22, 2023. REUTERS/Temilade Adelaja/File Photo

By Shariq Khan

NEW YORK (Reuters) -Oil prices settled at their highest levels since October on Wednesday on investor concerns about supply disruptions due to conflict in the Middle East, although a jump in U.S. crude oil inventories capped the gains.

Brent futures rose 43 cents, or 0.5%, to settle at $89.35 a barrel, and U.S. West Texas Intermediate futures gained 28 cents, or 0.3%, to $85.43 a barrel.

Both contracts were up more than a dollar earlier in the session due to growing concerns about the potential for a supply deficit during the peak summer driving season.

A meeting of top ministers from the Organization of Petroleum Exporting Countries and its allies including Russia, kept oil supply policy unchanged on Wednesday and pressed some countries to boost compliance with output cuts.

The group said some members would compensate for oversupplies in the first quarter. It also said Russia would switch to output rather than export curbs.

"If those compensation cuts get implemented, and Russia switches their export cuts to crude cuts, OPEC+ production should trend lower in the second quarter - a period when demand seasonally picks up," UBS analyst Giovanni Staunovo said.

Also on Wednesday, Federal Reserve Chair Jerome Powell was cautious about future interest rate cuts due to recent data showing higher-than-expected job growth and inflation.

The comments were positive for oil because they indicated solid U.S. economic growth, said Rob Haworth, senior investment strategist for U.S. Bank's asset management group.

In the Middle East, Iran has vowed revenge against Israel for an attack on Monday that killed high-ranking Iranian military personnel. Iran is the third-largest producer in OPEC.

Brent and WTI futures have hit five-month intraday highs for three consecutive sessions, also lifted as Ukraine's attacks on Russian refineries cut fuel supply there.

Oil market participants are figuring out how to price in these developments and for how long, said Angie Gildea, the U.S. national sector lead for energy, natural resources and chemicals at KPMG.

Bank of America (NYSE:BAC) Global Research raised its 2024 Brent and WTI forecasts to $86 and $81 a barrel, respectively, it said in a note.

© Reuters. FILE PHOTO: A view of the newly commissioned Dangote oil refinery is pictured in Ibeju-Lekki, Lagos, Nigeria, May 22, 2023. REUTERS/Temilade Adelaja/File Photo

Oil's gains were capped after the U.S. Energy Information Administration reported U.S. crude stocks increased by 3.2 million barrels in the week to March 29. Analysts polled by Reuters had expected a decrease of more than 1.5 million barrels, in line with data reported by the American Petroleum Institute on Tuesday. [EIA/S] [API/S]

"The EIA report went in the other direction on crude oil from what the API reported yesterday, so that has helped pause the rally a little bit," said Bob Yawger, director of energy futures at Mizuho.

Latest comments

It's like US is all world, no its not. America actually is Indian earth, occupied by Americans and they are immigrants and pretend to be someone . Ha ha haaaaa
Risk Disclosure: Trading in financial instruments and/or cryptocurrencies involves high risks including the risk of losing some, or all, of your investment amount, and may not be suitable for all investors. Prices of cryptocurrencies are extremely volatile and may be affected by external factors such as financial, regulatory or political events. Trading on margin increases the financial risks.
Before deciding to trade in financial instrument or cryptocurrencies you should be fully informed of the risks and costs associated with trading the financial markets, carefully consider your investment objectives, level of experience, and risk appetite, and seek professional advice where needed.
Fusion Media would like to remind you that the data contained in this website is not necessarily real-time nor accurate. The data and prices on the website are not necessarily provided by any market or exchange, but may be provided by market makers, and so prices may not be accurate and may differ from the actual price at any given market, meaning prices are indicative and not appropriate for trading purposes. Fusion Media and any provider of the data contained in this website will not accept liability for any loss or damage as a result of your trading, or your reliance on the information contained within this website.
It is prohibited to use, store, reproduce, display, modify, transmit or distribute the data contained in this website without the explicit prior written permission of Fusion Media and/or the data provider. All intellectual property rights are reserved by the providers and/or the exchange providing the data contained in this website.
Fusion Media may be compensated by the advertisers that appear on the website, based on your interaction with the advertisements or advertisers.
© 2007-2024 - Fusion Media Limited. All Rights Reserved.