2024.03.1319:17:00UTC+00Oil Future Settle Sharply Higher On Inventory Drop, Geopolitical Tensions

Oil prices rose sharply on Wednesday after data showed an unexpected drop in U.S. crude inventories in the week ended March 8th.

Supply disruptions in Russia due to continued attacks by Ukrainian drones on Russian oil refineries contributed as well the rise in oil prices.

"The Ryazan oil refinery was attacked by a drone," Pavel Malkov, the governor of the Ryazan region that lies some 200 kilometres (120 miles) southeast of Moscow, wrote on Telegram.

West Texas Intermediate Crude oil futures for April ended higher by $2.16 or about 2.8% at $79.72 a barrel.

Brent crude futures were up $2.25 or 2.75% at $84.17 a barrel a little while ago.

Data released by the Energy Information Administration (EIA) showed crude inventories in the U.S. dropped by 1.5 million barrels last week.

Gasoline stockpiles dropped by about 5.7 million barrels last week, as against expectations for a decline of 1.9 million barrels, while distillate stocks increased by 888,000 barrels, as against expectations of a 150,000-barrel decline.

OPEC expects oil demand this year to rise 1.43 million barrels per day over the previous year, slightly up from an earlier forecast for a rise of 1.42 million barrels per day. The group expects oil demand to increase by about 1.85 million barrels per day next year.

The focus now is on the monthly report from the International Energy Agency (IEA), due on Thursday.