Oil extended gains after a U.S. government report showed crude stockpiles fell for the first time in a month and demand for fuel improved.
West Texas Intermediate rose as much as 3.4% to trade above $81 a barrel. Crude inventories fell 215,000 barrels last week, the U.S. Energy Information Administration reported. The country’s demand for distillates, which includes diesel, jumped last week bringing the four-week average back above 2020 levels for this time of year. Meanwhile, leaks in three Nord Stream pipelines that began Tuesday and are widely suspected to be sabotage are prompting concerns of a broader escalation of Russia’s energy conflict with Europe.
Oil futures markets have been volatile for months amid lackluster liquidity. Prices have now plunged almost 40% from their peak earlier this year, hitting revenues of petrostates, some of which form the Organization of Petroleum Exporting Countries.
Russia, which has to discount its barrels because of Western sanctions, is pushing OPEC and its allies to cut their collective output by 1 million barrels a day when the producer nations meet next week, Reuters reported Tuesday. A production cut would further tighten supplies and could rally prices.
West Texas Intermediate futures climbed $2.21 to $80.71 a barrel at 10:46 a.m. in New York. Brent added $1.89 to trade at $88.18 a barrel.
The European Union also announced a new round of sanctions on Russia Wednesday, which will include additional import bans on Russian products and prohibit sales of key technologies to the country. The measures will include a price cap on Russian oil exports, but the price details are not yet known.
Some of China’s top refiners are also expecting a better economy in the winter, a bullish signal for oil demand. Demand in the country, which is the world’s biggest crude importer, has remained weak for years because of its Covid Zero policy.
Risk assets were gripped by volatile trading on Wednesday as the Bank of England said it would buy long-dated government bonds in whatever quantities needed to restore order to the market. The dollar earlier rose to another record after the White House talked down the prospect of weakening the currency.
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