Oil rallied after U.S. stockpiles declined for the first time in seven weeks and a Ukrainian drone struck one of Russia’s biggest refineries.

West Texas Intermediate rose 2.8 per cent to settle near US$80 a barrel after a government report showed U.S. crude inventories shrank 1.54 million barrels last week. While the decline was less than the 5.5 million-barrel drop projected by an industry group, markets still interpreted the report as bullish as it was the first drawdown in almost two months. 

Bolstering crude’s gains earlier in the session was a strike on a Rosneft PJSC refinery with a capacity of 340,000 barrels a day, the latest in a slew of attacks on Russia’s oil-processing facilities. While refinery outages usually hurt oil prices by boosting the amount of crude waiting to be processed, the attack signaled heightened geopolitical risks.

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Benchmark oil futures have been stuck in a tight trading range this year. Prices slipped Tuesday as OPEC said its latest supply cuts had stalled — with Iraq still producing above its quota — and as U.S. inflation remained stubbornly high.

The Energy Information Administration said Tuesday that U.S. oil production will increase faster than previously expected this year, which will help buoy global supplies as OPEC+ cuts back. Ship-tracking data compiled by Bloomberg show US exports to Europe are set for a fresh record this month.

Prices:

  • WTI for April delivery rose 2.8 per cent to settle at $79.72 a barrel in New York.
  • Brent for May settlement gained 2.6 per cent to settle at $84.03 a barrel.