Government data showed that U.S. crude oil inventories fell last week by about 2.2 million barrels, to 416.3 million barrels. The decline far exceeded analysts' expectations, in a Reuters poll, with a decline of almost 320,<> barrels.
This followed voluntary production cuts of 1.3 million bpd until the end of the year from Saudi Arabia and Russia.
Brent crude continues to approach levels of $ 100 a barrel as it trades in magnified trading in Asia on Thursday above the levels of $ 97, an increase of 0.9 percent, the highest level since last November.
U.S. West Texas Intermediate crude futures rose more than a dollar to $94.70, the highest level since August 2022, and U.S. crude jumped 3.6 percent at settlement on Wednesday, its biggest gain since early May.
Inventories in Cushing, Oklahoma, the delivery point for U.S. crude, fell to just under 22 million barrels, the lowest level since July 2022 and close to the operating minimum.
Strong Dollar Fails to Rein in Oil
Amrita Sen, co-founder and head of research at Energy Aspects, said: "What I fear in this market is that we have reduced a lot of inventory. Right now, what's happening in the U.S. – (drying up inventories in Cushing)," according to Bloomberg.
WTI has jumped about a third since the end of June and is on track for its biggest quarterly gain since early 2022, driving up inflation and causing new problems for central banks.
Earlier this month, OPEC forecast a deficit of up to 3 million barrels per day of crude oil in the fourth quarter. With demand in the United States and China proving resilient, many in the market now see the price of $100 worth of oil as inevitable, even as the dollar rises and concerns about rising global interest rates persist.
The dollar climbed to a ten-month high against a basket of major currencies on Wednesday, sending the euro to a nine-month low and causing the likelihood of intervention to support the yen to increase.
The dollar index, which measures the currency's performance against a basket of currencies, rose to 106.7, the highest level since Nov. 30.
Speaking to Sky News Arabia, Ole Hansen, head of commodities strategy at Saxo Bank, said: "Our oil price outlook has been revised upward following strong support from the Middle East in terms of further production cuts.
"I simply think OPEC expects a large supply deficit during the fourth quarter of the year in conjunction with Saudi Arabia maintaining the voluntary cut, which will keep the markets tight in the coming months and therefore the risk of oil prices reaching a hundred dollars still exists." In Hansen's words.
However, Ole Hansen, head of commodity strategy at Saxo Bank, noted that some countries are heading towards stagflation, meaning the demand outlook in 2024 will be challenging.
He also stressed that OPEC members know full well that high oil prices will kill demand and this is not in their interest.
Warren Patterson, head of commodity strategy at ING Groep NV, said: "It's only a matter of time before Brent crude crosses the $100 per barrel level." "However, we believe that any breakthrough will be relatively short-lived, given the increasing pressure that is likely to be exerted on OPEC+ to ease supply cuts."
Inventories at Cushing have fallen for seven consecutive weeks and are considered by many traders to be already at levels that allow tankers to operate normally. Last-minute supplies from storage centers have become increasingly expensive, and U.S. crude has become too expensive for foreign buyers.