Oil climbs as investors track crisis in Ukraine, inventories

 

Bloomberg

Oil recovered from its biggest one-day loss this year as investors attempted to assess whether the Ukraine crisis was easing after Russia said it had pulled some troops back from the border.
West Texas Intermediate rose near $93 a barrel. President Joe Biden said the US hasn’t verified the claim that Russia is pulling back some troops and cautioned that an attack remains possible. Moscow has repeatedly denied it plans to invade its neighbour.
The American Petroleum Institute (API), meanwhile, said crude holdings at the storage hub in Cushing, Oklahoma falls 2.4 million barrels last week, according to people familiar with the figures. It’s the latest sign of dwindling inventories at key hubs, while oil product stocks at a key Middle Eastern hub also plummeted last week.
The steady erosion of supplies has pushed gauges of market strength to their strongest levels in years, indicating the near-term bullishness.
Crude is trading near the highest level since 2014 as investors bet global demand is running ahead of supply, draining inventories and forcing traders to pay steep premiums to get their hands on prompt barrels. The rally has lifted product prices including for gasoline. That’s fanning inflation and posing a thorny challenge for leaders including Biden, as well as central bankers.
“Market participants are still willing to pay a sizable premium for oil that is deliverable at short notice,” said Carsten Fritsch, an analyst at Commerzbank AG. “Yesterday’s market reaction is impressive proof of the extent to which the latest upswing had been driven by concerns about military escalation in the Russia-Ukraine conflict.”
The API also reported a smaller draw in nationwide crude stockpiles, as well as slightly lower holdings of gasoline and distillates. If the institute’s estimate for changes at Cushing proves to be accurate, holdings at the key hub would shrink to the least since 2018.

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