Oil prices rose in Asian trade on Thursday, buoyed by fears of supply disruptions stemming from worsening tensions in the Russia-Ukraine war, although a build in U.S. inventories limited overall gains.
Prices advanced this week as the use of long-range U.S. weapons by Ukraine against Russia ramped up tensions between the two countries, sparking concerns that oil supplies from Moscow could be disrupted.
Oil also benefited from some bargain buying after dropping to more than one-month lows last week. Still, overall gains were limited by concerns over slowing demand, especially as U.S. inventories grew more than expected.
Brent oil futures expiring in January rose 0.4% to $73.07 a barrel, while West Texas Intermediate crude futures rose 0.4% to $68.79 a barrel by 22:04 ET (03:04 GMT).
Russia-Ukraine tensions underpin oil
Rising tensions between Russia and Ukraine were a key point of support for oil markets, especially after the U.S. authorized Kyiv to use long-range missiles against Russia.
Moscow responded to this by lowering its threshold for nuclear retaliation, and warned of a dire escalation in the war.
Ukraine on Wednesday fired a fresh volley of Western-made missiles into Russia, potentially drawing more severe retaliation from Moscow. A key point of anxiety for oil markets is Ukraine’s continued targeting of Russia’s energy infrastructure, which could potentially disrupt oil supplies.
US inventories grow more than expected, gasoline stockpiles rise
Data from the U.S. Energy Information Administration showed on Wednesday that U.S. inventories grew 0.5 million barrels in the week to November 15, more than expectations for a build of 0.4 mb.
The build, while minimal, was a third straight week of builds.
More worrying for oil markets was a nearly 2.1 mb build in gasoline inventories, which spurred some concerns that U.S. fuel demand was cooling as the winter season approached.
Oil prices remained skittish on the prospect of increased supply and softening demand in the coming year, which some analysts expect to cause a supply glut.
Reuters reported that the Organization of Petroleum Exporting Countries and allies (OPEC+) was planning to further postpone increases in oil production when it meets on December 1
Source: Investing