The words couldn’t be more fitting for the oil bulls who hit their $90-a-barrel target on Wednesday, not only from their own push but also from the tireless message of Wall Street banks that have been trying to get there for months.
Brent rose to $90.07 a barrel, a level not seen since 2014, as the London-traded global crude benchmark rallied 14% after surging 50% last year. Brent crude settled at $89.96 a barrel, up $1.76, or 2%, on the day.
West Texas Intermediate, the U.S. crude benchmark, closed up $1.75, or 2 percent, at $87.35 a barrel after a session high of $87.94. After rising about 50% in 2021, WTI is up 16% from the previous year.
“In markets, narrative sometimes matters, not necessarily hard data,” said John Kilduff, a partner at Again Capital, an energy hedge fund in New York. “Aided by geopolitical tensions and the impression that the market is severely undersupplied, the oil narrative is now overwhelmingly on the positive side – something that can only be confirmed in a few months.”
Oil prices rose on Wednesday amid strong speculation that Russia will invade Ukraine, despite Moscow’s repeated denials of such an intention. This week, U.S. troops were placed on “high alert” for possible deployments to Eastern Europe, while NATO sent additional ships and fighter jets to the region, in anticipation of a worsening of the Russian-Ukrainian conflict.
Crude producers in the OPEC+ alliance, which includes Russia, have also reduced output in the past month, reinforcing the theory that the market is undersupplied.
U.S. gasoline inventories rose for a fourth straight week, data from the U.S. Energy Information Administration showed on Wednesday, but last week’s huge buildup since late December eased as refiners processed less crude into products amid weak fuel demand. .
Motor fuel gasoline, also known as gasoline outside the United States, is the most consumed petroleum product in the United States. Gasoline inventories rose by 1.3 million barrels in the week ended Jan. 21, compared with expectations for a 2.5 million-barrel rise after a 5.9 million-barrel rise last week, EIA data showed.
Despite the contraction in the latest week, the entire barrel of gasoline has swelled by nearly 25 million barrels since the end of December, a record high, as Americans start driving less.
EIA data also showed crude inventories rose for a second straight week as refiners processed less oil into gasoline. Crude inventories rose by 2.4 million barrels last week, compared with market expectations for a decrease of 728,000 barrels and a rise of 515,000 barrels the previous week.
The rise in crude oil prices has contradicted the state of a fuel glut in the United States, the world’s largest oil consumer. Wall Street banks also ignored this factor, focusing on geopolitical tensions in Eastern Europe and tight OPEC+ supply.
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