Oil prices rose in early Asian trade on Thursday as concerns over tight global supplies were heightened by a steep drop in U.S. crude stocks. Brent crude futures increased by 16 cents to $96.71 a barrel, while U.S. West Texas Intermediate crude futures rose by 20 cents to $93.88. The U.S. Energy Information Administration reported that crude stocks fell by 2.2 million barrels to 416.3 million barrels, way beyond the 320,000-barrel drop predicted by analysts. Additionally, stocks at the Cushing, Oklahoma storage hub, which is the delivery point for U.S. crude futures, fell by 943,000 barrels to the lowest level since July 2022.
The decline in crude stocks is a result of production cuts by Saudi Arabia and Russia, members of OPEC+. They have implemented a reduction of 1.3 million barrels a day until the end of the year. This, combined with strong refining and export demand, has caused stockpiles at Cushing to approach historic low levels. Concerns have arisen about the quality of the remaining oil at the hub and whether it will fall below minimum operating levels. In response to rising fuel prices caused by increased exports, President Vladimir Putin has instructed his government to stabilize retail fuel prices. His deputy prime minister has suggested restricting exports of oil products purchased for domestic use to address market tightness.