Oil Rallies On U.S. Drawdown And Attacks On Russian Refineries

Crude oil prices were up nearly 3% on Wednesday, reaching a four-month high after data showed a larger than expected drop in U.S. crude and gasoline inventories. Also spurring gains for the market was news of attacks on Russian refineries by Ukraine forces, with at least one Rosneft plant damaged.

The global benchmark Brent crude rose $2.11, or 2.6%, to settle at $84.03 a barrel, while the U.S. benchmark West Texas Intermediate (WTI) crude rose $2.16, or 2.8%, to settle at $79.72.

The gains came following a report from the U.S. Energy Information Administration (EIA) showing a drop of 1.5 million barrels of crude from U.S. stockpiles for the week ending March 8. Consensus expectations were looking for a smaller drop of 1.3 million barrels.

Additionally, the EIA data showed that 5.7 million barrels of gasoline were pulled from stocks in the same week. Analysts were forecasting a far smaller drawdown of 1.9 million barrels.

The drop in gasoline stockpiles was most concerning to traders as seasonal maintenance outages loom, and the summer driving season is just around the corner. Some analysts are now projecting far higher gasoline prices over the summer months.

In other news, Ukraine forces struck at Russian refineries for a second consecutive day of heavy drone attacks, causing a fire at one of Rosneft’s largest refineries. The attacks come just days before Russia’s presidential elections, with current president Vladimir Putin expressing his concerns that the attacks are an attempt to disrupt the elections.

Damage to Russia’s refining capacity could cause a drop in Russian exports of diesel as well as increased Russian imports of gasoline, which would cause a global increase in crude prices.