Oil prices surge on tight supplies, China optimism; WTI at 1-yr high

investing.com:

Investing.com-- Oil prices rose sharply in Asian trade on Thursday, with U.S. crude futures hitting an over one-year high on continued signs of tighter supply, while positive data from China also aided sentiment. 

The signals helped markets largely look past concerns over higher-for-longer U.S. interest rates, following a string of hawkish comments from Federal Reserve officials. 

U.S. inventory data showed that stockpiles shrank more than expected in the week to September 22.  Data from China also spurred some optimism over an economic recovery in the world’s largest oil importer. China’s industrial profits rose for the first time this year in August, helping trim a year-to-date slump in profits.

Focus is now on purchasing manager’s index data from China, due later this week, for more cues on economic activity. Chinese fuel demand is also expected to increase during the week-long Autumn festival holiday, which begins on Friday. 

Brent oil futures jumped 1% to $95.23 a barrel, staying within sight of a 10-month high, while West Texas Intermediate crude futures surged 1.3% to $94.88 a barrel by 21:17 ET (1:17 GMT)- their strongest level since August 2022.

U.S. crude inventories shrank by a bigger-than-expected 2.2 million barrels (mb) in the week to September 22, their fifth week of draws in the past seven.

The reading, which also showed a 0.9 mb drop in the Cushing, Oklahoma hub, indicated that oil supplies remained tight in the world’s largest fuel consumer.

This added to bets that global oil supplies will tighten further this year, especially after deep supply cuts from Russia and Saudi Arabia. Russia also banned most fuel exports this week, adding to expectations that global fuel markets will tighten. 

Oil prices