Oil Jumps as U.S Emergency Reserve Falls to 1984 Level
Amidst uncertainties in the global markets, crude oil prices spike on Monday, driven by tight supply and a decline in the United States emergency reserve.
Crude inventory in the U.S. emergency reserves fell by 3.1 million barrels in the week to Aug. 26, according to data from the Department of Energy.
Stockpiles in the Strategic Petroleum Reserve (SPR) fell to 450 million barrels, according to the data, the lowest since December 1984. The 3.1 million-barrel draw was the smallest draw since the end of April.
International benchmark Brent crude traded at $99.67 per barrel, gaining 0.66% from the closing price of $99.01 a barrel in the previous trading session.
American benchmark West Texas Intermediate (WTI) was at $93.75 per barrel at the same time for a 0.74% gain after the previous session closed at $93.06 a barrel.
After Saudi Arabia’s energy minister Abdulaziz bin Salman pointed to production cuts to stabilize the market, another OPEC member, Oman, also supported Salman’s warnings.
“Oman supports OPEC+ efforts to maintain market stability in the face of distortions and volatility,” Omani ministry said in a tweet posted on Friday. READ: Crude Oil Prices Spike Ahead of OPEC+ Meeting
The OPEC group will also introduce a new production scheme, with a possible reduction in output as the current production cut pact will expire at the end of September.
The rise comes as supplies remain tight, with little fresh progress on a deal to renew the 2015 nuclear accord that would allow Iran to resume oil exports to the global market while partisan fighting in Libya raises concern its exports could again be suspended.
However, recession worries remain a concern following Friday’s speech from Jerome Powell at the Kansas City Fed’s annual conference in Jackson Hole, Wyoming, as the chair promised to continue raising interest rates to quell inflation despite costs to growth and employment.
“Crude oil trades higher extending last week’s gain with supply concerns more than offsetting the potential negative growth/demand impact of Powell’s higher-for-longer interest rate speech on Friday at Jackson Hole.
“An Iran nuclear deal has yet to be reached with a breakthrough unlikely to add much in terms of additional barrels before next year. Libya, one of OPEC’s most volatile producers saw deadly clashes in the capital over the weekend sparking fears over supply to an energy starved Europe,” Saxo Bank said in a note on its website. # Oil Prices Jump as U.S Emergency Reserve Falls to 1984 Level