Oil prices rise 2% after supply disruption as Ukraine attacks Russian refineries; Brent at $83/bbl

Coming to the benchmarks, Brent crude futures were up $1.54, or 1.88 per cent, to $83.46 per barrel on track to hit a four-month high, while the US West Texas Intermediate crude gained $1.59, or 2.05 per cent, to $79.15, according to news agency Reuters. Brent prices remains range-bound despite Wednesday’s rally. 

Also Read: OMC stocks shed 4-6% as markets crash 1%; brokerage suggests ‘sell’ on IOC, HPCL: Why are prices discounting?

What’s driving crude oil prices?

-Ukraine launched a drone attack on Russian regions on Wednesday, causing a fire at Rosneft’s biggest oil refinery in what President Vladimir Putin said was an attempt to disrupt Russia’s presidential election.

-Oil and the wider financial markets also found support from sentiment that the latest US inflation data for February will not derail interest rate cuts by mid-year. Lower interest rates have historically supported oil demand.

-In an earlier sign of strong demand, the Organization of the Petroleum Exporting Countries (OPEC) on Tuesday stuck to its forecast for oil demand growth of 2.25 million barrels per day (bpd) in 2024, higher than many other forecasts.

-Paris-based International Energy Agency (IEA) and the producer group OPEC have emerged most divided on oil demand forecast than they have been since at least 2008. IEA predicted in February this year that oil demand will rise by 1.22 mbpd in 2024.

-The OPEC cartel led by Saudi Arabia and Russia and its allies or OPEC+ agreed earlier this week to extend voluntary oil output cuts of 2.2 million barrels per day into the second quarter or mid-2024.

Where are prices headed?

The dollar index managed to rebound from its lows, which in turn limited the gains in crude oil prices. Nonetheless, bullish sentiment was bolstered by strong demand projections from OPEC+ for 2024, according to analysts.

‘’Looking ahead, we anticipate continued volatility in crude oil prices. Crude oil is expected to find support at the $76.90–$76.30 range, with resistance encountered between $78.30 and $78.90. When converted to INR, crude oil is supported at ₹6,360– ₹6,290, with resistance levels seen at ₹6,510– ₹6,580,” said Rahul Kalantri, VP Commodities, Mehta Equities Ltd.

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Published: 13 Mar 2024, 10:30 PM IST