Singapore: Oil prices increased for a second consecutive session on Thursday, bolstered by concerns about possible supply disruptions due to U.S. sanctions on Russia, a bigger-than-expected decline in the U.S. Crude oil inventories and a positive outlook for global demand. Brent crude futures increased by 23 cents, or 0.3 per cent, reaching Rs 7115.21 ($82.26) per barrel by 0731 GMT, following a 2.6 per cent gain in the prior session, marking their highest point since July 26 of the previous year. U.S. West Texas Intermediate crude futures increased by 28 cents, or 0.4 per cent, reaching $80.32 a barrel, following a 3.3 per cent rise on Wednesday to their peak since July 19.
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Last week, the U.S. crude oil inventories dropped to their lowest level since April 2022 due to an increase in exports and a decrease in imports, the Energy Information Administration (EIA) reported on Wednesday. The reduction of 2 million barrels surpassed the 992,000-barrel drop, which analysts anticipated in a Reuters survey. The decrease contributed to a more constrained global supply forecast following the implementation of wider sanctions on Russian oil exporters and tankers. The latest U.S. sanctions have prompted Moscow's main clients to search worldwide for substitute barrels, with shipping costs rising sharply.
Global Oil Demand Rises Amid Festive Travel in India and China
On Wednesday, the Biden administration enacted hundreds of new sanctions aimed at the Russian military-industrial sector and methods of evasion. In the meantime, the Organization of the Petroleum Exporting Countries and its partners, known collectively as OPEC+, have been reducing production for the last two years and are expected to be wary about boosting supply despite the recent price surge, according to Commodity Context founder Rory Johnston.
Oil prices rise amid supply concerns.
"The producer group has experienced its optimism shattered so often this past year that it will likely proceed with caution before initiating the cut-easing process," Johnston stated. Restricting oil profits, Israel and Hamas have come to an agreement to cease hostilities in Gaza and swap Israeli captives for Palestinian detainees, as per an official source.
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In the demand sector, global oil increased by 1.2 million barrels daily in the initial two weeks of 2025 compared to the same timeframe last year, marginally lower than anticipated, according to a note from JPMorgan analysts. Experts predict that oil demand will increase by 1.4 million bpd year-on-year in the upcoming weeks, fueled by increased travel in India, where a large festival is occurring, and by travel for the Lunar New Year festivities in China at January's end. Certain investors are monitoring possible interest rate reductions by the Federal Reserve before year-end in light of data showing a decline in core U.S. inflation—this could bolster economic activities and energy use.
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