Brent crude is closing on $100 a barrel as data shows US stockpiles shrinking and demand picking up

London (AFP) - Oil prices on Thursday reached their highest levels in nearly a year, with Brent North Sea crude advancing towards $100 on tight supplies, an increase that has weighed on stock markets.

Brent hit $97.69 a barrel on spot markets, 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.

“Another leg up in oil prices has added to the market worries about sticky inflation, thereby stoking fears that interest rates will stay higher for longer,” said Russ Mould, investment director at AJ Bell.

Crude futures have been supported in recent sessions by thinning supplies after Saudi Arabia and Russia said they would cut output until the end of the year, alongside a pick-up in demand in key consumer nations including the United States and China.

News that crude stockpiles at the key US storage facility in Cushing, Oklahoma, had fallen to the lowest levels since July last year added support to prices.

The dollar also retreated following recent strong gains on expectations that the Federal Reserve would probably raise US borrowing costs once more, and take a while before starting to cut them.

“While a longer period of high global interest rates could be problematic for oil demand in the future, supply side traits could favour continued upside risks for the price in the short-term,” said Tim Waterer, chief market analyst at KCM Trade.

The dollar remains close to the 150-yen mark last seen in October 2022, leading Japanese authorities to say they are keeping an eye on movements and are ready to intervene to support their currency.

The euro was mixed as a forecast showed that a recession expected in Germany this year could be worse than expected.

Europe’s biggest economy will shrink 0.6 percent this year, more than previously thought by leading economic institutes.

“The most important reason for this revision is that industry and private consumption are recovering more slowly than we expected,” said Oliver Holtemoeller, from the Halle Institute for Economic Research, one of the five groups behind the forecast.

News that troubled Chinese property developer Evergrande suspended trading in its Hong Kong-listed shares added to the overall caution, given the widespread potential impact of any financing problems for the company.

- Key figures around 1100 GMT -

Brent North Sea crude: DOWN 0.3 percent at $96.27 per barrel

West Texas Intermediate: DOWN 0.2 percent at $93.49 per barrel

London - FTSE 100: DOWN 0.3 percent at 7,568.72 points

Frankfurt - DAX: FLAT at 15,224.28

Paris - CAC 40: UP 0.3 percent at 7,089.27

EURO STOXX 50: DOWN 0.1 percent at 4,134.85

Tokyo - Nikkei 225: DOWN 1.5 percent at 31,872.52 (close)

Hong Kong - Hang Seng Index: DOWN 1.4 percent at 17,373.03 (close)

Shanghai - Composite: UP 0.1 percent at 3,110.48 (close)

New York - Dow: DOWN 0.2 percent at 33,550.27 (close)

Dollar/yen: DOWN at 149.29 yen from 149.64 yen on Wednesday

Euro/dollar: UP at $1.0539 from $1.0502

Pound/dollar: UP at $1.2196 from $1.2134

Euro/pound: DOWN at 86.41 pence from 86.54 pence