In Friday’s early Asian trading session, West Texas Intermediate (WTI) crude oil prices have climbed to approximately $70.25 per barrel, driven by escalating concerns over supply disruptions stemming from the ongoing conflict between Russia and Ukraine. Strains in the geopolitical landscape intensified this week, particularly after Ukraine deployed missiles provided by Western nations into Russian territory. This escalation is raising fears that supplies of crude oil could be affected.
Tensions further escalated when Russia’s President announced missile strikes against Ukrainian military facilities, signaling a potential widening of conflict. Such developments have shifted market focus towards the implications of the war, raising the prospect of a more severe disruption to crude oil supplies. Industry analysts suggest that this situation is contributing to the upward momentum in WTI prices.
However, on the flip side, recent increases in U.S. crude oil inventories could temper this momentum. The latest weekly report from the Energy Information Administration (EIA) has revealed a gain of 545,000 barrels in crude oil stockpiles for the week ending November 15. This marks a lower increase compared to the prior week, which saw a rise of over 2 million barrels. Market expectations had anticipated a more modest increase of about 400,000 barrels.
Additionally, a strengthening U.S. dollar is likely to limit WTI’s upward trajectory, as oil is priced in dollars. A stronger dollar makes oil more expensive for international buyers, potentially curbing their demand. The U.S. Dollar Index recently approached 107.05, after reaching a year-to-date high of approximately 107.15, contributing to the dual forces of rising oil prices due to geopolitical tensions and pressures from domestic inventory levels.
