Oil prices rose on Thursday as robust U.S. fuel consumption data and expected falls in Russian supply late in the year offset concerns that a possible looming recession could undercut demand.
West Texas Intermediate futures gained $2.34, or 2.68%, to $89.51 a barrel.
Prices rose more than 1% during the previous session, although Brent at one point fell to its lowest since February.
Futures have fallen over the past few months, as investors have pored over economic data that has spurred concerns about a potential recession that could hurt energy demand.
British consumer price inflation jumped to 10.1% in July, its highest since February 1982, intensifying a squeeze on households.
China’s refining output remained lacklustre in July as strict COVID-19 lockdowns and fuel export controls curbed production.
Supporting prices, U.S. crude stocks fell by 7.1 million barrels in the week to Aug. 12, Energy Information Administration (EIA) data showed, against expectations for a 275,000-barrel drop, as exports hit 5 million barrels per day (bpd), the highest on record.
Bans by the European Union on Russian seaborne crude in December and on products imports early next year could dramatically tighten supply and drive up prices, analysts warn.
“The EU embargoes will force Russia to shut in around 1.6 million barrels per day (bpd) of output by year-end, rising to 2 million bpd in 2023,” consultancy BCA research said in a note.
“EU embargoes on Russian oil imports will significantly tighten markets and lift Brent to $119 a barrel by year-end.”
For now, however, Russia has started to gradually increase oil production after sanctions-related curbs and as Asian buyers have increased purchases, leading Moscow to raise its forecasts for output and exports until the end of 2025, an economy ministry document reviewed by Reuters showed.
Russia’s earnings from energy exports are expected to rise 38% this year partly due to higher oil export volumes, according to the document, in a sign that supply from the country has not been affected as much as markets originally had expected.