A Mobil gas station in Los Angeles, California, US, on Tuesday, April 2, 2024. US crude futures hit $85 a barrel in New York for the first time since October, as OPEC+ supply cuts underpin a steadily strengthening market.
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Crude oil futures edged lower Thursday, taking a breather as traders took stock of the market after prices advanced more than 2% this week to hit the highest level since October.
The West Texas Intermediate contract for May delivery fell 31 cents to $85.10 a barrel, while the Brent contract for June delivery lost 19 cents to $89.16.
Oil prices have rallied this year, booking three consecutive months of gains with U.S. crude adding 19% while Brent is up about 16%.
Prices at the pump averaged $3.57 per gallon nationwide Thursday, the highest level since Oct. 18, according to data from the motorist association AAA. Gasoline prices typically rise as the summer driving season draws closer, but mounting geopolitical tensions and tight crude market are also at play.
The crude oil rally comes as the wars in Eastern Europe and the Middle East raise renewed fears about supply disruptions. Ukraine has repeatedly struck Russian oil refineries, reducing the OPEC+ member’s capacity.
Tensions are also mounting between OPEC member Iran and Israel, after Tehran accused the Netanyahu government of striking its consulate in Damascus.
The market is also expected to enter a deficit 450,000 barrel per day in the second quarter as demand grows while global inventories fall as OPEC+ members voluntarily slash production, according to Bank of America.
An OPEC+ committee on Wednesday recommended no changes to the group’s current production policy. Some members are voluntarily slashing 2.2 million barrels per day.
