NEW YORK (REUTERS) - Oil prices jumped on Wednesday (April 13) as a large increase in US crude inventories failed to soothe worries about tight global supply, with major oil traders expected to shun Russian barrels.
Brent crude settled up US$4.14 or 4 per cent to US$108.78.
US West Texas Intermediate (WTI) crude futures ended up US$3.65 or 3.7 per cent to US$104.25.
The gains came a day after both benchmarks climbed more than 6 per cent. The oil market has swung wildly as end users and traders have tried to quantify the disruption in Russia's daily exports following its invasion of Ukraine. Most estimates range from one million to three million barrels per day (bpd).
"At the end of the day, the market is running on some of these headlines out of Russia, which is becoming more threatening, and that continues to be more of a risk," said Mr Phil Flynn, analyst at Price Futures Group. "There is still a debate of what impact this is going to have."
On Tuesday, United States President Joe Biden accused Russia of genocide, and the US, France and Germany all pledged to send more weapons to Ukraine. Mr Biden listed artillery systems, armoured personnel carriers and helicopters.
Major global trading houses plan to reduce crude and fuel purchases from Russia's state-controlled oil companies as early as May 15, sources said, to avoid falling foul of European Union sanctions on Russia, the world's second-largest crude exporter.
Russian President Vladimir Putin said Moscow can easily redirect exports of its vast energy resources away from the West. Some countries, including India, have kept buying Russian oil at steep discounts.
On Tuesday, the International Energy Agency (IEA) lowered expectations for worldwide demand and said rising global production could offset Russian oil output losses. The IEA said it expects Russian output to drop 1.5 million bpd in April, growing to close to three million bpd from May.
The White House is releasing 180 million barrels from US reserves over six months, part of a release of 240 million barrels from members of the IEA.
US production is expected to keep rising from 11.8 million bpd now to about 12 million in 2022. Exports of refined products reached an all-time record as heavy overseas demand caused US stockpiles to fall.
The Organisation of Petroleum Exporting Countries has said it would be impossible to replace expected supply losses from Russia and that it would not pump more crude.
