US benchmark June West Texas Intermediate crude oil futures increased by more than 1% on Thursday. This price rise was due to a reduction in U.S. crude reserves and a suspension of exports from the Kurdistan region in Iraq.
These factors counteracted the effect of a smaller-than-anticipated decrease in Russian oil supplies, which would have otherwise put downward pressure on the price of oil.
To prop up the prices, producers in the semi-autonomous Kurdistan region of northern Iraq have closed down or decreased production at various oilfields, as revealed by statements from the companies. This was in response to the suspension of the northern export pipeline. Additionally, there are expectations of more shutdowns in the near future.
US Crude Oil Stockpiles Decline Unexpectedly, Refinery Operations Hit Record Highs
The Energy Information Administration (EIA) reported a surprising decrease in crude oil inventories in the US for the week ended March 24.
The drop was attributed to higher refining activity, lower imports, and strong export rates, resulting in a decline of 7.5 million barrels in crude inventories to 473.7 million barrels, compared to an anticipated rise of 100,000 barrels.
Gasoline inventories dropped by 2.9 million barrels, exceeding expectations, but tight inventories could cause prices to reach $5 per gallon, which could harm demand in the beginning of the summer driving season.