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Oil jumps to 2023 highs amid low tank levels at US storage hub

Ines Ferré
·Senior Business Reporter
Updated ·2 min read

Oil futures hit a 2023 high on Wednesday after inventories at the largest storage hub in the US fell toward levels nearing operational minimums.

West Texas Intermediate (CL=F) jumped more than 3% to settle at $93.68 per barrel following a drop in stockpiles to just below 22 million barrels at the Cushing, Okla., hub. The storage facility is considered a benchmark for US oil prices.

Brent International (BZ=F) futures also rose on Wednesday, trading more than 2.5% higher to $96.55 per barrel.

The rise in prices has fueled speculation of $100 per barrel oil in the coming months. Goldman Sachs recently raised its price target to $100 for the next 12 months. Even the more bearish forecasters at Citi believe crude may temporarily hit that level.

Crude futures have jumped more than 35% since the end of June. Supply squeeze concerns have been exacerbated by the extension of unilateral production cuts from Saudi Arabia and fuel export bans from Russia.

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“There are more outcomes that say the price of oil does go up to 100 bucks a barrel,” Ed Hirs, economist and energy fellow at the University of Houston, told Yahoo Finance on Wednesday. “The one thing that would keep the price of oil very depressed would be the Chinese economy imploding.”

China is facing a property crisis as its government works on initiatives to grow the economy post COVID-19 lockdowns last year.

An aerial view of a crude oil storage facility is seen on May 5, 2020 in Cushing, Oklahoma. - Using his fleet of drones, Dale Parrish tracks one of the most sensitive data points in the oil world: the amount of crude stored in giant steel tanks in Cushing, Oklahoma. The West Texas Intermediate oil stored in the small town in the midwestern United States is used as a reference price for crude bought and sold by refiners in Asia, hedge funds in London and traders in New York. (Photo by Johannes EISELE / AFP) (Photo by JOHANNES EISELE/AFP via Getty Images)
An aerial view of a crude oil storage facility is seen on May 5, 2020 in Cushing, Okla. The West Texas Intermediate oil stored in the small town in the midwestern United States is used as a reference price for crude bought and sold by refiners in Asia, hedge funds in London, and traders in New York. (Johannes EISELE / AFP) (JOHANNES EISELE via Getty Images)

Wall Street analysts have weighed in on what prolonged higher oil prices could mean for the broader economy.

"On net, we estimate the last moves in the price of oil, if sustained, would damp annualized global GDP growth by 0.5%-point over two quarters," JPMorgan's head of economic research Bruce Kasman and his team wrote in a note to investors.

Earlier this week, Goldman Sachs economists said higher oil prices are a "manageable" headwind for the US economy, though the firm lowered its GDP forecast fractionally.

Ines Ferre is a senior business reporter for Yahoo Finance. Follow her on Twitter at @ines_ferre.

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