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Oil prices edged higher on Thursday as concerns over escalating tensions between Russia and Ukraine outweighed the impact of a larger-than-expected increase in inventories. Brent crude futures rose 16 cents to $72.97, while U.S. West Texas Intermediate crude futures increased by 16 cents to $68.91.
Geopolitical tensions intensified as Ukraine fired British Storm Shadow cruise missiles into Russia, following the use of U.S. ATACMS missiles. This escalation could have significant implications for oil markets, with potential targets on Russian energy infrastructure.
On the demand side, JPMorgan analysts noted a recovery in oil consumption driven by improved travel demand in the U.S. and India, as well as a rise in industrial demand. Global oil demand is expected to reach 103.6 million barrels per day in November, up 1.7 million bpd from last year.
However, the gains in oil prices were tempered by a larger-than-expected increase in U.S. crude inventories, along with rising gasoline stocks. Additionally, Norway’s Equinor restored full output at the Johan Sverdrup oilfield, adding to the supply side pressure.
Looking ahead, OPEC+ may delay output increases at their upcoming meeting in December due to weak global oil demand. The International Energy Agency (IEA) warned that even with production cuts remaining in place, oil supply could exceed demand by 2025.
Overall, the geopolitical tensions between Russia and Ukraine, coupled with demand and supply dynamics, are likely to keep oil markets volatile in the near term. Investors should closely monitor developments to assess their impact on oil prices and market stability.
