Crude prices edged up about 1% on Thursday after dropping to a seven-month low in the prior session after Russia threatened to halt oil and gas exports to some buyers.
That price increase came despite a surprise build in US crude inventories last week and concerns that China’s extension of Covid-19 lockdown measures would slow global economic activity and hit fuel demand.
US crude stockpiles surged by nearly 9 million barrels last week due to a combination of increased imports and ongoing releases from government emergency reserves, the Energy Information Administration said.
The hefty build compares with the 300,000-barrel draw analysts forecast in a Reuters’ poll and data from American Petroleum Institute industry group showing a 3.6-million-barrel increase.
“We got beat up so bad yesterday and then the (EIA) report came out and we had a sharp drop and now we’re higher than we were before the report, which seems to suggest that the market had an inkling that this was going to happen,” said Phil Flynn, an analyst at Price Futures Group. Brent futures rose $1.17, or 1.3%, to $89.17 a barrel by 1537 GMT, while US West Texas Intermediate (WTI) crude traded $1.65, or 2%, higher at $83.59.
On Wednesday, both benchmarks dropped over 5% to close at their lowest levels since mid to late January.
Prices drew some support from Russian President Vladimir Putin’s threat to halt oil and gas exports if price caps are imposed by European buyers.
The European Union proposed capping Russian gas prices, raising the risk of rationing this winter if Moscow carries out its threat.
Russia’s Gazprom has already halted flows from the Nord Stream 1 gas pipeline, cutting off a substantial percentage of supply to Europe.
Published in The Express Tribune, September 9th, 2022.
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