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Supply risks and strong US economic growth are driving oil prices higher

The oil prices rose modestly on Wednesday. They extended gains from the previous session. This was due to the robust U.S. economy and the threat of "supply disruptions" from Venezuela and Russia.

Brent crude futures rose 4 cents or 0.06% to $62.42 per barrel at 0117 GMT. U.S. West Texas Intermediate crude gained 3 cents or 0.05% to $58.41.

Brent oil prices rose by over 2% Monday. WTI also climbed the highest since November 14. Prices rose by more than 0.5% again on Tuesday.

In its first estimate of the third-quarter GDP, Commerce Department's Bureau of Economic Analysis stated that consumer spending was driving faster growth than expected.

It said that the gross domestic product grew at the fastest rate since the third quarter 2023 (a 4.3% annualized increase).

The robust U.S. GDP print last night was a major factor in the overnight gains. "Q3 GDP was printed against a backdrop escalating global tensions," IG's Tony Sycamore wrote in a note.

Haitong Futures stated in a recent report that disruptions to Venezuelan exports have been the main factor for market sentiment. Russia and Ukraine continuing attacks on each others' energy infrastructure has also supported prices.

Analysts say that the market has overlooked the oil inventory data for the largest consumer of oil in the world due to other factors.

Market sources cited American Petroleum Institute data on Tuesday to report that U.S. crude oil inventories increased by 2.39 millions barrels in the past week. Gasoline stocks also rose by 1.09 million barrels. Distillate inventories also rose by 685,000, according to market sources.

Due to the holiday, U.S. Energy Information Administration will release their data on Monday.

Haitong Futures stated in its report that the market's reaction to this build in inventory was limited due to the temporary spike in refined oil demand in December.

The U.S. president Donald Trump announced earlier this month that all oil tankers subject to sanctions would be blocked from entering or leaving Venezuela. This has caused vessel owners to be on high alert.

TankerTrackers.com, a monitoring service, reported on Tuesday that the Panama-flagged, very large crude carrier Kelly has returned to Venezuelan waters after U.S. interceptions.

After the U.S. targeted two more vessels over the weekend, and seized the supertanker Skipper this month, there are now 12 loaded vessels in Venezuela awaiting new instructions from their owners. (Reporting from Sam Li in Beijing, Siyi Liu and Muralikumar Anantharaman in Singapore)

(source: Reuters)