GLTALongs. Burn the shorts. Low share price. On Sale!!!! 08:56 AM EDT, 09/21/2022 (MT Newswires) -- Oil traded higher early on Wednesday after Vladimir Putin threatened to escalate his war on Ukraine by mobilizing additional troops, even as a hike to US interest rates is expected to be announced later in the afternoon and a report showed a rise in US oil inventories last week.
West Texas Intermediate crude for November delivery was last seen up US$1.01 to US$84.95 per barrel, while November Brent crude, the global benchmark, was up US$113 to US$91.75.
The rise comes after Putin said Russia will mobilize an additional 300,000 troops as the country suffers setbacks in its invasion, with Ukraine recapturing broad swathes of its territory in recent fighting. While new soldiers are expected to take months to train and equip, the escalation and accompanying nuclear threats boosted the price of commodities, including oil and gas.
"Commodities depending on supply from Russia and the Black Sea has risen strongly during the past 24 hours after Putin announced plans to step up its war in Ukraine. European natural gas prices trade back above 200 euro per MWh with the cost of diesel also receiving a bid," Ole Hanson, head of commodity strategy at Saxo Bank, said in a post on the bank's website.
Despite the rise the threat of recession continues to limit the upside for oil. The Federal Reserve's policy committee will end its two day meeting later on Wednesday with a likely hike to US interest rates of at least 75 basis points, as the central bank looks to slow the economy to quell high inflation.
The American Petroleum Institute's weekly inventory survey on Tuesday showed US stocks rose by 1.04-million barrels last week, less than expectations for a 2.32-million barrel rise, according to Oilprice.com, while gasoline and distillate stocks also climbed. The Energy Information Administration will release official inventory figures later on Wednesday morning.