By Gina Lee
Investing.com – Oil was up on Wednesday morning in Asia as sanction effects on Russian banks took hold and traders avoided Russian supplies following Moscow’s invasion of Ukraine.
Brent oil futures rose 2.84% to $110.27 by 9:34 PM ET (2:34 AM GMT) and crude oil WTI futures jumped 5.08% to $108.66. These are highs not seen since July 2014.
Tuesday's U.S. crude oil supply data from the American Petroleum Institute showed U.S. crude inventories decreased by 6.1 million barrels for the week ended Feb. 25, compared with a build of 6 million barrels reported by the API for the previous week. Analysts were expecting a build of about 2.8 barrels.
Gasoline inventories fell by 2.5 million barrels last week, and distillate stocks increased by 400,000 barrels.
Investors now await U.S. crude oil supply data from the U.S. Energy Information Administration, due later in the day. Analysts polled by Reuters expecting a crude inventory build of 2.7 million barrels.
"Trade disruptions are starting to get people's attention," noted Westpac economist Justin Smirk.
"Issues around trade finance and insurance - that's all impacting exports from the Black Sea. The supply shocks are unfolding," he said.
Russian oil exports make up approximately 8% of the world’s supply.
Although Western powers have not imposed sanctions on energy exports directly, U.S. traders at hubs in New York and the U.S. Gulf are shunning Russian crude.
"People are not touching Russian barrels. You may see some on the water right now, but they were bought prior to the invasion. There won't be much after that," a New York Harbor trader told Reuters.
International Energy Agency member countries agreed on Tuesday on a coordinated release of 60 million barrels of oil to put a lid on market gains. However, observers cautioned that it would only provide a bandaid solution on the supply front.
"They helped to cap the rise, but if you want to turn prices around, you need something more sustainable," said Smirk.
Commercial oil stockpiles are at their lowest since 2014, according to the IEA.
The Organization of the Petroleum Exporting Countries, Russia and allies, together known as OPEC+, are due to meet on Wednesday where they are expected to stick to plans to add 400,000 barrels per day of supply each month.