Brent crude oil is trading near a seven-year high of $90 U.S. per barrel, lifted higher after the U.S. Federal Reserve signaled that it would soon start raising interest rates to lower inflation.
Benchmark futures are hovering near $90 U.S. a barrel, its highest level since 2015.
The global economy is contending with rampant inflation just as crude prices hit their highest level since 2014.
The recent rally in oil markets comes as physical supplies remain extremely tight, and after the Fed prepared markets for an interest rate hike as early as March and opened the door to more frequent, potentially larger rate increases than previously expected.
Swaps tied to the North Sea market that helps price much of the world’s oil are trading at their firmest level since 2019, while gauges of market strength, known as “time spreads,” are trading at their strongest level since last November.
Traders are also tracking events in Ukraine on concern that Russia may launch an invasion after massing thousands of troops on the border, potentially disrupting energy supplies.
Oil has rallied in the opening weeks of 2022 on the continued recovery in energy consumption from the ravages of the global pandemic. With demand coming in stronger than expected and growing concerns about how much further producers will ramp up output, stockpiles at some key hubs have been waning in recent weeks.
Brent crude oil for March settlement rose by 0.3% to $90.19 U.S. a barrel at 10:19 a.m. in London trading, while West Texas Intermediate crude oil for March delivery added 0.2% to $87.52 U.S. a barrel.
Inventories at the key U.S. storage hub in Cushing, Oklahoma fell again last week to hit their lowest level for this time of year in a decade. At the same time weekly oil consumption is at its highest level for this time of year in at least 30 years, driven in part by a spate of cold weather in the U.S.
The Organization of Petroleum Exporting Countries and its allies, including Russia, will get a chance to weigh in next week when they meet on February 2. The coalition is expected to approve an increase of 400,000 barrels a day of crude oil for March, according to media reports.
