Crude oil prices rise as US inventories decline and concerns about US rate hikes and China's economic indicators persist.
Oil prices edge higher in an uncertain market as US crude futures rise 0.1% to $78.94 a barrel, despite a 2% drop for the week, due to production cuts by major oil producers and a mixed US economy.
Oil prices rose over 1% as the dollar strengthened ahead of a speech by the head of the U.S. Federal Reserve for clues on interest rates, with Brent crude reaching $84.29 a barrel and U.S. West Texas Intermediate crude at $79.92, while a strong dollar and recent inventory draws affected demand and supply.
Crude oil prices rose after the U.S. Energy Information Administration reported a larger-than-expected inventory decline of 10.6 million barrels for the week ending August 25.
U.S. commercial crude oil inventories have fallen by 34 million barrels since mid-July, tightening the market and causing spot prices and spreads to rise.
Crude oil prices remain high, supported by production cuts and a decrease in inventory, while the WTI futures contract reached a 10-month peak at $86.09 and the Brent contract traded above $89 for the first time since January.
Brent crude oil is trading at around $90 a barrel and could potentially reach $100 a barrel, leading to global market disruptions and potential inflationary effects on the global economy.
Oil prices could reach triple-digit territory by next year if Russia and Saudi Arabia maintain their aggressive supply cuts, according to Goldman Sachs, with Brent crude potentially climbing to $107 a barrel by December 2024.
The United States government has seized nearly one million barrels of Iranian crude oil that was being smuggled to China in violation of U.S. sanctions against Iran, after raising the threat of prosecution to get the tanker brought to American waters.
Crude oil prices in the US increased due to a 6.3 million barrel inventory draw, following a massive decline of 10.6 million barrels the previous week, bringing inventories to the lowest in eight months.
The US continues to see draws in crude inventories, tightening markets, despite Saudi Arabia and Russia's extension of production and export cuts, as well as other energy news such as the cancellation of Alaskan drilling, Kurdistan's demand for funds, and the spike in jet fuel costs.
China's record crude oil processing and robust imports in August have painted a bullish picture of demand, but the vast quantities of oil flowing into inventories should not be ignored, with China adding about 1.32 million barrels per day to either commercial or strategic crude stockpiles in August.
Global oil prices continue to soar, with Brent crude nearing $95 per barrel and some crude grades surpassing $100, driven by tight supply, excess demand, and production cut extensions by Saudi Arabia and Russia.
