Oil prices soared to their highest level in over a year on Thursday after crude stocks at a key storage hub fell to their lowest since July last year.

Crude inventories in Cushing, Oklahoma fell to 22 million barrels in the fourth week of September — hovering close to the operational minimum --- a drop of 943,000 barrels compared to the prior week.

Brent hit $97.69 a barrel on spot markets on Thursday, the highest price since November last year, before easing as profit-taking set in.

New York's main contract, WTI, hit $95.03, a peak since August 2022, but later dropped below $94.

Many energy analysts think that oil prices will soon rise above $100 a barrel for the first time in more than a year, since the turmoil that followed Russia’s invasion of Ukraine. The price of Brent crude has gained about 30 per cent since the start of July.

“I think prices are starting to melt up,” said Robert McNally, president of Rapidan Energy Group, a research firm.

Hani Abuagla, senior market analyst at XTB Mena, said when Russia attacked Ukraine, uncertainty about supplies drove prices to almost $130 per barrel. “However, when the market saw that there were no global oil supply issues, the price dropped significantly from June of the previous year to June of the current year. But record global demand and a strong global production cut by Opec+ have brought back the ghost of $100 per barrel. This may indicate that the fight against inflation is far from over.”

Abuagla noted that Saudi Arabia announced an additional voluntary cut of 1.0 million barrels/day, and Russia cut exports by 0.3 million bpd. Both of these actions have been extended to the end of this year. “The market had earlier expected a deficit of 2.0 million bpd by year's end, but it is now clear that this deficit will be even greater. Such a massive deficit was last seen in 2007-2008 when prices soared to nearly $150 per barrel.”

Ipek Ozkardeskaya, senior analyst at Swissquote Bank, said energy and technology stocks helped the S&P 500 limit losses on Wednesday. “The energy sector was up on a fresh jump in oil prices after US inventories at Cushing and Oklahoma fell to critical levels, hinting at growing supply deficit in global energy space.”

“Today’s price action seems to be Cushing driven, as it reaches a 22 million barrels low, the lowest level since July 2022,” said Bart Melek, managing director of TD Securities.

"If the inventories continue to dip below those levels, it’s going to be rough getting crude out into the market," Melek said on CNBC’s “Street Signs Asia.” He predicted that oil prices will continue to remain at high level for the rest of the year, with an upside

“Opec+ production cuts, including the voluntary extra cut by Saudi Arabia, are bearing fruit, lowering oil inventories and supporting prices,” UBS wrote in a note dated September 28.

The investment bank forecasts Brent to trade between the ranges of $90 to $100 per barrel over the coming months, with a year-end target of $95 per barrel.

Analysts noted that the current surge in prices results from a convergence of factors, including unforeseen disruptions, concerns regarding feedstock quality, supply chain bottlenecks, and diminishing stockpiles.

They argued that while it is true that elevated oil prices could prove advantageous for Saudi Arabia in achieving fiscal balance and provide Russia with additional resources for its military operations, the prospect of oil prices surpassing the triple-digit mark may prompt US shale producers to ramp up their output in an effort to mitigate price increases.

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