Oil jumps 2% on falling US inventories, drone strikes on Russian refineries

Oil prices rose more than 2% on Wednesday amid signs of tightening supply, including declining US inventories and continued drone attacks on Russian refineries.

On Tuesday, West Texas Intermediate (CL=F) hovered just above the $79 per barrel level while Brent (BZ=F), the international benchmark price, traded above $83 per barrel.

Crude inventories dropped by 5.52 million barrels for the week ending March 8 versus expectations for a draw of 400,000 barrels, according to data from the American Petroleum Institute (API).

Gasoline and distillate inventories also dropped last week, a bullish sign for oil.

“Today’s rally is keeping the bullish trend alive in crude as supplies are looking tighter and spring fuel demand is beginning to show,” Dennis Kissler, senior vice president at BOK Financial, wrote in a Wednesday note.

Escalating drone attacks on Russian refineries stemming from the Ukraine-Russia war over the past two days have also impacted the oil markets.

“Not only are crude oil prices rising, but [the attacks] will also curtail Russian diesel exports and perhaps turn them into a gasoline importer. Russian customers need to seek alternative supplies, and Russia needs to buy from the world market,” said Andy Lipow of Lipow Oil Associates on Wednesday.

On Tuesday oil alliance OPEC maintained its prior forecast for global oil demand to grow by 2.2 million barrels per day in 2024.

In March OPEC+ extended output cuts of 2.2 million per day into the second quarter. Expectations that the cartel would continue with the reductions sent contract prices higher last month.

Futures climbed in January and February of this year. WTI briefly touched a 2024 high just above $80 per barrel on March 1.

Ines Ferre is a senior business reporter for Yahoo Finance. Follow her on X at @ines_ferre.