U.S. oil jumped nearly $1 a barrel on Thursday to its highest in more than a year as a steep drop in crude stocks in the United States added to worries of tight global supplies from OPEC+ cuts led by Saudi Arabia.
U.S. West Texas Intermediate crude futures (WTI) led the charge, rising above $95 for the first time since August last year. WTI was at $94.60 a barrel, up 92 cents, or 1%, by 0145 GMT.
Brent crude futures climbed 77 cents, or 0.8%, to $97.32 a barrel after hitting levels not seen since November.
"The oil market is quickly coming to terms with the fact that the OPEC+ cuts announced in the summer are having a deep effect on crude availability," said Stefano Grasso, a senior portfolio manager at 8VantEdge in Singapore.
"Stocks are drawing while demand keeps growing. We are still far away from a price level causing demand destruction."
U.S. crude stocks fell by 2.2 million barrels last week to 416.3 million barrels, government data showed, far exceeding the 320,000-barrel drop analysts expected in a Reuters poll.
Crude stocks at the Cushing, Oklahoma, storage hub, delivery point for U.S. crude futures, fell by 943,000 barrels in the week to just under 22 million barrels, the lowest since July 2022, data showed.
Stockpiles at Cushing have been falling closer to historic low levels due to strong refining and export demand, prompting concerns about quality of the remaining oil at the hub and whether it will fall below minimum operating levels.
The crude draws follow production cuts of 1.3 million barrels a day to the end of the year by Saudi Arabia and Russia of the Organization of the Petroleum Exporting Countries and allies known as OPEC+. The group will be meeting on Oct. 4 to review markets.
"We expect as near-term oil prices continue to push higher a reduction of current supply cuts is increasingly likely," National Australian Bank's analysts said in a note.
Grasso said: "I think Saudi can accept much higher prices, but not much lower, and if cutting 10% production gives them 30% price increase it make sense to do."
President Vladimir Putin ordered his government to ensure retail fuel prices stabilise after a jump caused by an increase in exports.
In response, his deputy prime minister cited proposals to restrict exports of oil products purchased for domestic use, adding to market tightness. (Reporting by Florence Tan and Laura Sanicola; Editing by Jacqueline Wong)