Oil extended its rally on Wednesday as a further decline in U.S. inventories added to the effects of the recent OPEC+ decision to cut output by 1.16 million barrels per day.
West Texas Intermediate was up to more than $81 a barrel after closing at its highest level in 10 weeks. Over the first two days of the week, crude rallied by almost 7% after the Organization of Petroleum Exporting Countries and its allies including Russia announced an unexpected supply cut. This decision has convinced leading banks that crude can rally to $100 per barrel as had occurred in the thick of the Russia-Ukraine conflict and the resultant energy crisis last year.
The U.S. industry-funded American Petroleum Institute reported that U.S. crude stockpiles have fallen by 4.3 million barrels, which includes a decline at a key storage hub in Cushing, Oklahoma.
Vishnu Varathan, the Asia head of economics and strategy at Mizuho Bank Ltd., observed that a slowdown in the U.S. labor market does not seem to have had a significant impact on oil prices. “It looks like oil has noted, but is not daunted by, the ramifications of a weaker jobs market,” Varathan observed.
