Oil rallies the most since July as supply risks tighten outlook
BNN Bloomberg
Oil jumped the most since July as an escalating energy conflict with Russia and declining U.S. inventories raised the prospect of supplies tightening in the near term.
West Texas Intermediate settled above US$82 a barrel after rising 4.7 per cent, the most in a single day since mid-July. U.S. crude stockpiles fell last week for the first time in a month as some regional fuel stockpiles declined precariously. The European Union announced a new round of sanctions against Russia while three ruptured pipelines in the Baltic Sea are widely suspected to be the result of sabotage. A weaker U.S. dollar also bolstered Wednesday’s rally.
“The damage to Nord Stream is very concerning both from a supply issue and a political issue in that it assures supply from Russia is not reliable,” said Dennis Kissler, senior vice president at Bok Financial Securities. “It raises concerns that all energy prices are vulnerable to price spikes if we see an early start to a harsh winter.”
Oil futures have been volatile for months amid lackluster liquidity. Prices stand almost 40 per cent lower than their peak earlier this year amid a rising sense of certainty that central bank efforts around the world to contain inflation will lead to an economic slowdown. However, geopolitical uncertainty still threatens supplies as traders watch for any hint of a slowdown.
