Oil prices extended gains in early trading on Wednesday as a larger-than-expected drawdown in U.S. crude inventories and rising geopolitical tensions raised investor concerns about tight supplies.
price movement
Brent crude futures for June delivery rose 20 cents, or 0.22 percent, to $89.12 a barrel, while U.S. West Texas Intermediate (WTI) crude futures for May delivery rose 17 cents, or 0.2 percent, to $85.32 a barrel, by 0015 GMT.
Brent and West Texas Intermediate crudes had risen to their highest levels since October in the previous session.
U.S. crude inventories fell by 2.3 million barrels last week, more than analysts’ expectations in a Reuters poll for a 1.5 million-barrel draw. U.S. government data is due later Wednesday.
On the geopolitical front, a Ukrainian drone bombed one of Russia's largest refineries in an attack that Russia initially said it repelled.
Gazprom said oil derivatives production had also been halted at the Astrakhan gas processing plant controlled by Russia's energy giant after a repair-related shutdown on March 30, confirming an earlier Reuters report.
A Reuters analysis of images showing the impact of the attack suggests it hit a key refining unit at the refinery, accounting for about half of the plant’s total annual production capacity of 340,000 barrels per day. The damage does not appear to be serious.
Moscow said that gasoline and diesel stocks in Russia remain high.
Russia, one of the world's top three oil producers and one of the largest exporters of petroleum products, is facing Ukrainian attacks on oil refineries and Russia has also attacked Ukraine's energy infrastructure.
Elsewhere, Iran said it would retaliate against Israel for an airstrike that killed two of its generals and five military advisers at its embassy compound in Damascus, raising the risk of further escalation in the Middle East conflict.
Also tightening supplies, Mexican state energy company Pemex has asked its trading unit to cancel up to 436,000 barrels per day of crude exports this month as it prepares to process domestic oil at its new Dos Bocas refinery, an internal document seen by Reuters showed.
But five OPEC+ sources told Reuters that the bloc's ministerial committee was unlikely to recommend any changes to oil production policy at its meeting on Wednesday.
The dollar also fell against a basket of currencies today, helping to support demand for dollar-denominated commodities such as oil.
