Crude oil rose nearly 3% on Wednesday, boosted by record crude exports from the world’s largest oil producer, the United States.
Crude exports increased to 5.1 million barrels per day, the highest level ever, lowering net US crude imports to their lowest level in history.
Furthermore, the US Dollar’s weakness aided the rise in oil prices, as the greenback’s recent strength has been a significant factor impeding oil market gains.
The dollar fell for the second day in a row to its lowest level in three weeks, making commodities priced in the currency more appealing.
The US dollar has been stronger than other major currencies as the Federal Reserve has aggressively raised interest rates.
These two factors aided the price of Brent crude futures, which rose by $2.17, or 2.3 percent, to $95.69 per barrel yesterday, while US West Texas Intermediate (WTI) crude futures rose by $2.59, or 3%, to $87.91 per barrel.
Markets remained in the middle ground as traders considered a dimming outlook for demand while anticipating a tighter supply landscape due to production cuts and the full implementation of European sanctions on Russian oil.
Earlier this month, the Organization of Petroleum Exporting Countries (OPEC) surprised markets by cutting its output targets by a larger-than-expected amount.
Oil analysts anticipate supply will tighten in the coming months after that move, and Europe is expected to ban oil imports from Russia and restrict Russian shippers from the global shipping insurance industry next month.
The ban may tighten world shipping markets, which could also increase the price of oil.
Many analysts believe Russia can get around the sanctions, but the country could still lose between 1 million and 2 million barrels of oil per day.
Prices rose after the Energy Information Administration (EIA) reported a 2.6 million barrel increase in crude oil inventories for the week ending October 21, compared to a 1.7 million barrel draw the previous week, accompanied by moderate moves in fuel inventories.
Meanwhile, Mr. Joe Biden’s administration is working to resolve the fuel supply crisis, with Energy Secretary Jennifer Granholm meeting with industry executives to discuss the possibility of reopening shuttered refineries.
