Oil prices rise after Ukraine's attack on Russian warehouses

Oil prices on global stock exchanges are rising. According to analysts, Ukraine's attack on Russian oil storage facilities and the tightening of US sanctions have offset signals that the market is facing oversupply.

A barrel of West Texas Intermediate crude oil for December deliveries increased by 1.4% on the NYMEX in New York. to $59.51.

The price of Brent on ICE for January increases by 1.27%. to USD 63.81 per barrel.

A Ukrainian drone attacked an oil depot at the Russian Black Sea port of Novorossiysk, an important export hub.

Russian services reported that the attack, which took place on Friday morning, damaged a ship in the port and an oil storage facility.

“Ukrainian drone attacks on the port of Novorossiysk have raised new concerns about disruptions to oil supplies as the port is Russia's second-largest crude export center and comes on the heels of another major attack in Tuapse just two weeks ago,” said June Goh, senior oil analyst at Sparta Commodities.

“The scale of the damage is not yet known, but if the escalation continues, supplies of both crude oil and products from Russia will be limited,” she added.

The U.S. Energy Information Administration (EIA) reported on Thursday a larger-than-expected increase in US crude oil inventories last weekwhile gasoline and distillate stocks fell less than expected.

Oil inventories rose by 6.4 million barrels to 427.6 million barrels in the week ended Nov. 7, EIA said, compared with expectations in a Reuters poll of an increase of 1.96 million barrels.

Investors are also monitoring the impact of Western sanctions on crude oil supplies and trade flows in Russia.

The US imposed sanctions on Russian oil companies Lukoil and Rosneft as part of efforts to persuade the Kremlin to enter into peace talks with Ukraine. The sanctions prohibit transactions with Russian companies after November 21.

The price of Brent crude oil is down 15% this year due to growing expectations of excess supply. The Organization of the Petroleum Exporting Countries (OPEC) and its allies are restarting idle production capacity to regain market share, and countries outside the group have also increased production.

“We are seeing a familiar pattern in the market, with frequent, temporary rallies and sharp corrections,” said John Driscoll, founder and director of JTD Energy Services. (PAP Business)

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