Oil Jumps to Three-Month High as Cold Snap Tightens Inventories
Oil rose to a three-month high after another contraction in US crude stockpiles, driven by frigid winter weather, reflected a tighter global market.
Brent futures advanced as much as 2.3%, surpassing $78 a barrel for the first time since mid-October. Crude inventories at the American storage hub in Cushing, Oklahoma, have dropped to the lowest level since 2014, government data showed on Wednesday.
Traders are also wary of further sanctions on key exporters, with flows from Russia and Iran to Asia under strain recently. Market metrics also point to tighter fundamentals.
Brent’s prompt spread — the difference between its two nearest contracts - has widened to 78 cents a barrel in backwardation, a bullish pattern. A month ago, the premium stood at 29 cents.
Oil’s push higher in recent weeks has been supported by cold weather that’s boosted demand for heating fuels, the drawdown in US inventories, and lower shipments from Russia. President-elect Donald Trump’s imminent return to the White House is also raising risks to Iranian supplies, and creating nervousness about a potential trade war that could interrupt flows of energy.
Brent for March delivery gained 2.3% to $78.65 a barrel at 9:54 a.m. in London.
The global benchmark is up 2.8% this week
WTI for February delivery rose 2.3% to $75.63 a barrel.
Source: Bloomberg
