Published : 3 weeks ago, on 20/11/2024

By Ahmad Ghaddar

LONDON (Reuters) -Oil prices edged higher on Wednesday as concern that escalating hostilities in the Ukraine war could potentially disrupt oil supply from Russia outweighed data showing rising U.S. crude stocks.

Brent crude futures for January were up 40 cents, or 0.6%, at $73.71 a barrel by 1420 GMT. U.S. West Texas Intermediate crude futures for December, due to expire on Wednesday, were up 56 cents, or 0.8%, at $69.95, while the more active WTI contract for January was up 47 cents, or 0.7%, at $69.71.

The escalating war between major oil producer Russia and Ukraine has kept a floor under the market this week.

“We may expect (Brent) oil prices to stay supported above the $70 level for now, as market participants continue to monitor the geopolitical developments,” said Yeap Jun Rong, market strategist at IG.

On Tuesday, Ukraine used U.S.-supplied ATACMS missiles to strike Russian territory for the first time, Moscow said, while Russian President Vladimir Putin lowered the bar for a possible nuclear attack.

The price action in the oil market has been relatively uneventful post-U.S. election, with some pick-up in the past couple of days due to a temporary production outage in the North Sea and a further escalation in the nature of the confrontation in Ukraine,” said Harry Tchilinguirian, head of research at Onyx Capital Group.

Norway’s Equinor on Wednesday said it had restored full output capacity at the Johan Sverdrup oilfield in the North Sea following a power outage. Equinor last month said the field was producing at peak capacity of around 755,000 barrels of oil equivalent per day.

On the demand side, U.S. crude oil stocks rose by 4.75 million barrels in the week ended Nov. 15, market sources said on Tuesday, citing American Petroleum Institute figures.

That was a bigger build than the 100,000-barrel increase analysts polled by Reuters were expecting.

Gasoline inventories, however, fell by 2.48 million barrels, compared with analysts’ expectations for a 900,000-barrel increase.

Distillate stocks also fell, shedding 688,000 barrels last week, the sources said.

Official government data is due later on Wednesday.

“If we get a confirmation of the API’s preliminary crude stock build figure, the market is likely to retrace lower to the levels seen at the start of the week,” Onyx Capital’s Tchilinguirian said.

(Additional reporting by Jeslyn Lerh in Singapore; editing by Jason Neely, Louise Heavens and Christina Fincher)