Oil hits highest since 2014 on Russia-Ukraine tension

API data shows US crude stocks drop; Investors awaiting Wednesday’s Fed update; Biden threatens sanctions on Putin over any Ukraine invasion

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Brent crude rose $1.37, or 1.6 per cent, to $89.57 at 1319GMT after reaching $89.60, the highest since October 2014. US West Texas Intermediate (WTI) crude was up $1.13, or 1.3 per cent, to $86.73. — AP file photo

By Reuters

Published: Wed 26 Jan 2022, 5:42 PM

Oil rose to a seven-year high close to $90 a barrel on Wednesday, supported by tight supply and geopolitical tensions in Europe and the Middle East that raise concerns about further disruption.

US President Joe Biden said on Tuesday he would consider personal sanctions on President Vladimir Putin if Russia invades Ukraine. On Monday, Yemen’s Houthi movement launched a missile attack on a United Arab Emirates base.

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“Anxiety over potential supply disruptions in the Middle East and Russia is providing bullish fodder for the oil market,” said Stephen Brennock of oil broker PVM.

Brent crude rose $1.37, or 1.6 per cent, to $89.57 at 1319GMT after reaching $89.60, the highest since October 2014. US West Texas Intermediate (WTI) crude was up $1.13, or 1.3 per cent, to $86.73.

“The market downside is limited due to heightened tensions between Russia and Ukraine and the threat to infrastructure in the UAE,” said Hiroyuki Kikukawa, general manager of research at Nissan Securities.

Underlining a tight supply and demand balance, the weekly US inventory report from the American Petroleum Institute on Tuesday showed crude stocks fell by 872,000 barrels, market sources said.

The official Energy Information Administration (EIA) supply report is due at 1530GMT.

Investors across the markets are also awaiting the update at 1900GMT from the US Federal Reserve. The Fed is expected to signal plans to raise interest rates in March as it focuses on fighting inflation.

In another key development, the Organization of the Petroleum Exporting Countries and allies, known as Opec+, meets on February 2 to consider another output increase.

Opec+ has been gradually unwinding 2020’s record output cuts, raising its monthly target by 400,000 barrels per day, though the actual increase in supply has fallen short of that as some countries struggle to raise production. — Reuters

Reuters

Published: Wed 26 Jan 2022, 5:42 PM

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