Brent crude oil prices rose on Wednesday to $90 a barrel, as low Cushing and distillate inventories combine with supply jitters in Europe, Russia-Ukraine tensions, and falling Russian seaborne crude imports from the Baltics.
As of 11:00 a.m. EST on Wednesday, even after the weekly U.S. inventory report from the EIA showed a build in crude oil inventories, WTI Crude prices were up 1.96% at $87.27, while Brent Crude briefly hit $90, up nearly 2% on the day.
Brent crude hit the highest level since 2014 as inventories at the Cushing hub in Oklahoma-the delivery point for WTI-sunk by another million barrels on Tuesday, according to API data, to the lowest point since 2012-more than 30% below the five-year average.
Distillate inventories also saw a large draw, according to EIA data, of 2.8 million barrels, sending inventories to 2014 lows.
On top of U.S. fundamentals, the tension between the West and Russia over Ukraine continues to push prices up.
On Tuesday, U.S. President Joe Biden said, commenting on the Russia-Ukraine crisis: "I have made it clear to - early on to President Putin that if he were to move into Ukraine, that there'd be severe consequences, including significant economic sanctions, as well as I'd feel obliged to beef up our presence - NATO's presence in - on the eastern front: Poland, Romania, et cetera."
Fears that sanctions on Russia could cause a shortage of crude oil and natural gas have rattled the commodity markets in recent days.
The final upward pressure in this oil price scenario is Russia's exports from its Baltic Sea ports, which are set to drop next month to the lowest level in five months. The concern here is that Russia is unable to ramp up crude oil output as much as its OPEC+ agreement has allowed.
By Julianne Geiger for Oilprice.com
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Julianne Geiger is a veteran editor, writer and researcher for Oilprice.com, and a member of the Creative Professionals Networking Group. More