Oil prices climbed in Asian trading on Thursday as fears of supply disruptions due to escalating tensions in the Russia-Ukraine war outweighed concerns over a build in U.S. inventories.
Amidst reports of Ukraine using long-range U.S. weapons against Russia, tensions between the two nations have intensified, leading to worries about potential disruptions in oil supplies from Moscow.
Despite reaching one-month lows last week, oil saw some gains this week supported by geopolitical tensions, although concerns over slowing demand and growing U.S. inventories tempered overall price increases.
Brent crude futures expiring in January rose 0.4% to $73.07 a barrel, while WTI crude rose 0.4% to $68.79 a barrel by 22:04 ET (03:04 GMT).
Russia-Ukraine Conflict Impact on Oil Prices
The escalating tensions between Russia and Ukraine, including the use of long-range missiles by Ukraine authorized by the U.S., have been a major factor supporting oil prices. Moscow’s response and warnings of potential nuclear retaliation have added to the uncertainty in the market.
With Ukraine targeting Russia’s energy infrastructure, there are concerns about potential disruptions in oil supplies, keeping investors on edge.
U.S. Inventory Data and Concerns Over Demand
The latest data from the U.S. Energy Information Administration revealed a higher-than-expected increase of 0.5 million barrels in U.S. crude inventories, marking the third consecutive week of builds.
Of particular concern was the significant build of 2.1 million barrels in gasoline stockpiles, sparking worries about cooling U.S. fuel demand as winter approaches.
Analysts are monitoring the potential for increased supply and weakening demand in the coming months, which could lead to an oversupply situation. Reuters reported that OPEC+ is considering delaying further increases in oil production at their upcoming meeting on December 1.
Analysis:
The rise in oil prices due to geopolitical tensions and the impact of U.S. inventory data highlights the delicate balance between supply disruptions and demand concerns in the oil market. Investors should watch for developments in the Russia-Ukraine conflict and OPEC+ decisions, as they could have significant implications for oil prices and global energy markets. It is essential for individuals to stay informed about these factors to make informed decisions regarding their investments and finances.
