Oil prices soars as Russia, Ukraine exchange missile strikes

Investing.com--Oil prices rose Thursday, buoyed by fears of supply disruptions stemming from worsening tensions in the Russia-Ukraine war, although a build in U.S. inventories limited overall gains.

At 09:00 ET (14:00 GMT), Brent oil futures rose 1.9% to $74.19 a barrel, while West Texas Intermediate crude futures rose 2.1% to $70.19 a barrel. Russia-Ukraine tensions underpin oil

Prices advanced this week as the use of long-range weapons by Ukraine against Russia ramped up tensions between the two countries, sparking concerns that oil supplies from Moscow could be disrupted.

Ukraine fired British cruise missiles into Russia on Wednesday, a day after it fired U.S. missiles. Kyiv's air force said Russia responded early Thursday, launching an intercontinental ballistic missile at Ukraine, the first time Moscow has used such a powerful, long-range missile during the war.

"The risk is if Ukraine targets Russian energy infrastructure, while the other risk is uncertainty over how Russia responds to these attacks," said analysts at ING, in a note.

However, "Iran’s pledge to stop stockpiling uranium does counter some of the geopolitical risk, with it potentially reducing some of the supply risks related to Iran ahead of President-elect Trump entering office." US inventories grow more than expected

Data from the U.S. Energy Information Administration showed on Wednesday that U.S. inventories grew 0.5 million barrels in the week to Nov. 15, more than expected.

The build, while minimal, was a third straight week of builds.

More worrying for oil markets was a nearly 2.1 million-build build in gasoline inventories , which spurred some concerns that US fuel demand was cooling as the winter season approached.

Oil prices remained skittish on the prospect of increased supply and softening demand in the coming year, which some analysts expect to cause a supply glut.  OPEC+ to hold back output increases, again?

The International Energy Agency said last week that oil supply will substantially exceed demand in 2025, even if OPEC+ cuts remain.

The Organization of Petroleum Exporting Countries, and allies, a group known as OPEC+, is set to meet again at the start of December, and Reuters reported that the cartel may push back output increases again when it meets on Dec. 1 due to weak global oil demand.

The production group pumps around half the world's oil, and had initially planned to gradually reverse production cuts from late 2024 and through 2025.

(Ambar Warrick contributed to this article.)

Source: Investing.com