Oil prices have continued their march towards $100 a barrel, topping $97 after data showed that stockpiles in America had fallen by more than expected.
Brent crude, the global benchmark oil price, touched highs of $97.69 in early trading yesterday, the highest since November, before edging back down to $93.12 on Thursday night.
Crude stocks in the United States fell by 2.2 million barrels last week to 416.3 million barrels, official figures showed, a significantly greater decline than the 320,000 barrels analysts had forecast.
The recent spike in oil prices comes after two of the world’s biggest producers, Russia and Saudi Arabia, announced production cuts earlier this year.
The move helped boost the price of the commodity which has been climbing steadily since mid-August.
Susannah Streeter, head of money and markets at Hargreaves Lansdown, told the Press Association: “Concerns about tight supplies are fuelling the rise in oil prices, reigniting worries about inflation and the need for interest rates to stay higher for longer.
“Brent crude has swept past 97 US dollars a barrel as the effect of Saudi Arabia and Russia’s extended production cuts takes hold and data shows a faster than expected drawdown of crude stocks in the US.
“Despite slowing economies in Europe and fragility in China, global demand for oil for now continues to ramp up, to meet the seemingly insatiable needs for transportation, power generation and other petrochemical activities.
“The psychologically important milestone of 100 US dollars a barrel is in sight, which is prompting concerns about higher energy costs being passed on by companies in the form of higher prices.”
Ashley Kelty, analyst at Panmure Gordon, told The Times: “Oil prices moved sharply higher yesterday after a larger-than-expected draw from US inventories focused attention on wider market tightness. With an estimated physical shortfall of up to 3 million barrels of oil per day around the world, we will continue to see crude drawn from stocks, although while demand continues to grow it appears that we are still some way from the price level which causes demand destruction.
“Opec+ will be very happy with the current situation and attention will turn to the next meeting on October 4 to see if there are any hints over a shift in policy for 2024.”
Analysts at Bank of America upgraded their Brent crude price forecasts this week for the fourth quarter to $96 per barrel, from $82 per barrel previously.
“The recent run-up in refining margins is helping push Brent crude oil prices higher, together with deep production cuts from Saudi and Russia,” they said.