Oil Extends Gains, Investors Shrug Off US Supply Build Amid OPEC Policy, Geopolitical Tensions

Crude oil futures extended their gains, shrugging off a surprise build in domestic inventories of the energy commodity. Oil prices have been on a tear this year, rallying 20% on a blend of geopolitical tensions, tighter global energy markets, and stronger-than-expected economic data. Could US crude prices top $90 before the summer?

May West Texas Intermediate (WTI) crude oil futures surged $0.65, or 0.76%, to $85.80 per barrel at 17:36 GMT on Wednesday on the New York Mercantile Exchange. US crude prices are at their highest levels since October 2023.

Brent, the international benchmark for oil prices, is on the brink of topping $90 in the middle of the trading week. June Brent crude futures picked up $0.80, or 0.9%, to $89.70 per ounce on London’s ICE Futures exchange. Brent has risen 16% year-to-date.

According to the US Energy Information Administration (EIA), domestic inventories of crude oil advanced 3.21 million barrels for the week ending March 29, higher than the consensus estimate of a 1.511-million-barrel drawdown. Last week, US crude stockpiles rose by 3.165 million barrels.

Gasoline inventories declined by 4.256 million barrels, distillate stocks fell by 1.268 million barrels, and heating oil supplies dropped by 613,000 barrels.

Investors have concentrated more on geopolitical tensions, with Iran promising to retaliate against an Israeli strike on Tehran’s embassy in Syria that killed a top general and others.

Additionally, the Joint Ministerial Committee (JMC) concluded a meeting on Wednesday and stated that the Organization of the Petroleum Exporting Countries (OPEC) and its allies, OPEC+, will maintain the current policy of voluntarily reducing 2.2 million barrels per day of output.

Meanwhile, positive economic data support oil prices after the ADP National Employment Report confirmed that the private sector added 184,000 jobs in March. At the same time, the services sector showed signs of slowing as the Institute for Supply Management’s Services Purchasing Management Index (PMI) eased to 51.4 last month.

In other energy commodities, May natural gas futures dipped $0.012, or 0.64%, to $1.85 per million British thermal units (Btu). May gasoline futures added $0.0196, or 0.71%, to $2.7785 a gallon. May heating oil futures rose $0.0302, or 1.1%, to $2.7421 per gallon.

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