Oil rises 2pc on Russian refinery attacks and strong demand
Thursday, 14 March 2024
LONDON, Mar 13 (Reuters): Oil prices rose about 2 per cent on Wednesday, supported by potential supply disruption after Ukrainian attacks on Russian refineries, signs of strong demand and hopes that the Federal Reserve might start cutting interest rates soon despite sticky US inflation.
Ukraine launched a sweeping drone attack on Russian regions on Wednesday, causing a fire at Rosneft's biggest oil refinery in what President Vladimir Putin said was an attempt to disrupt Russia's presidential election.
"The sudden but understandable brightening of (oil price) sentiment has been triggered by the continuous strikes on Russian refiners," said Tamas Varga of oil broker PVM.
Brent crude futures for May rose $1.52, or 1.9 per cent, to $83.44 a barrel by 1300 GMT. US West Texas Intermediate crude for April gained $1.62, or 2.1 per cent, to $79.18.
Despite the rally, Brent has traded in a narrow range above $80 for more than a month, briefly rising above $84 in that time.
Also adding support, Varga said, was Tuesday's supply report from the American Petroleum Institute.
In an indication of healthy demand, US crude oil and fuel inventories fell last week according to sources citing the API report ahead of Wednesday's official US inventory figures.
In an earlier sign of strong demand, the Organization of the Petroleum Exporting Countries on Tuesday stuck to its forecast for oil demand growth of 2.25 million barrels per day (bpd) in 2024, higher than many other forecasts.
The International Energy Agency, which expects demand growth to be much lower, updates its forecasts on Thursday.
Oil and the wider financial markets also found support from sentiment that slightly hotter than expected US inflation will not derail interest rate cuts by the middle of the year. Lower rates support oil demand.
"The risk environment has largely stayed unfazed, riding on the firm belief that current market pricing for a rate cut only in June will do the job," said IG market strategist Yeap Jun Rong.