The benchmark U.S. oil price rose early on Thursday to the highest level since August 2022, extending Wednesday’s surge as U.S. commercial inventories continue to decline more than expected.
WTI Crude prices exceeded $95 per barrel in early Asian trade on Thursday, hitting the highest price level in 13 months. The international benchmark, Brent Crude, also jumped and touched a new high for 2023 after topping $97 per barrel.
Despite the continued strengthening of the U.S. dollar, oil rallied on Wednesday and early on Thursday in Asian trade as U.S. crude inventories continued to fall. The Energy Information Administration (EIA) reported on Wednesday a crude oil inventory draw of 2.2 million barrels for the week to September 22, far exceeding expectations of a draw in the low hundreds of thousands of barrels.
In addition, the level of stocks at the Cushing hub has fallen to its lowest since July 2022, further boosting the U.S. benchmark oil price. Cushing, Oklahoma, is the delivery point for the NYMEX crude oil futures contract.
Crude inventories at Cushing dropped by 943,000 barrels from the prior week to 22 million barrels, which is close to the operational minimum.
The low stocks at Cushing and the falling trend in U.S. commercial crude inventories add to tightening supplies elsewhere as the market has started to feel the impact of the OPEC+ production and export cuts.
“Stocks are drawing while demand keeps growing. We are still far away from a price level causing demand destruction,” Stefano Grasso, a senior portfolio manager at 8VantEdge in Singapore, told Reuters.
On Wednesday, Craig Erlam, senior market analyst at OANDA, commented on oil’s resumed rally, “I think what we’ve seen over the last week or so is a little profit-taking and the fact it’s already on the march higher is potentially a sign of how bullish traders still are.”