Oil prices surged to their highest level in over a year during Asian trading hours, 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, according to data from the US Energy Information Administration (EIA). That’s a drop of 943,000 barrels compared to the prior week.

The US West Texas Intermediate futures touched $ 95.03 per barrel during Asia trading hours, marking the highest since August 2022. It was last trading at $ 94.61 per barrel. Global benchmark Brent rose 1.05% to $ 97.56 a barrel.

“Today’s price action seems to be Cushing driven, as it reaches a 22 million bbl low, the lowest level since July 2022,” TD Securities Managing Director Bart Melek told CNBC.

If the inventories continue to dip below those levels, it’s going to be “rough” getting crude out into the market, Melek said. 

He forecasts that oil prices will continue to remain at “high level” for the rest of the year, with an upside risk if global oil cartel OPEC+ continues to keep supplies tight.

The global oil markets are looking at a “pretty robust deficit” on top of an already significant shortfall this quarter, Malek said, citing the oil production cuts implemented by OPEC and its allies.

In September, OPEC+ kingpin Saudi Arabia extended its one million barrel per day voluntary crude oil production cut until the end of the year. It brings Saudi’s crude output to nearly nine million barrels per day.

Additionally, Russia has pledged to extend its 300,000 barrels per day export reduction until the end of December.

(Source: CNBC)