Investing.com– Oil prices continued to power ahead Wednesday, as signs of shrinking U.S. inventories and more potential supply disruptions in Russia presented a tighter outlook for global crude markets, while OPEC+ kept the status quo. 

At 09:05 ET (13:05 GMT),  expiring in June rose 0.8% to $89.67 a barrel and rose 0.7% to $85.79 a barrel, both rising to their highest levels since October.

OPEC+ keeps output levels unchanged

OPEC+ ministers made no fresh policy recommendations in a meeting earlier Wednesday, as a ministerial committee of the Organization of the Petroleum Exporting Countries and allies, led by Russia, met to review the market and members’ implementation of output cuts.

OPEC+ members last month agreed to extend voluntary output cuts of 2.2 million barrels per day until the end of June to support the market.

This tightening of global supply is occurring amid fears of a broader conflict in the Middle East. Iran vowed retaliation against Israel for strikes on the Iranian embassy compound in Damascus, presenting the possibility of more supply disruptions in this oil-rich region. 

Elsewhere, oil prices had risen earlier this week after Mexico said it will also cut its oil exports, and Ukraine attacked Russia’s third-largest oil refinery earlier this week, although Reuters reports said the attack did not cause critical damage.

But the strike comes in the wake of several such attacks against Russia’s energy infrastructure – a trend that could potentially further stymie oil exports from Moscow. 

Expectations of tighter supplies helped oil prices rise past a stronger dollar and growing uncertainty over the path of U.S. interest rates.  

US oil inventories seen shrinking – API 

Data from the , released Tuesday, showed that inventories shrank nearly 2.3 million barrels in the week to March 28, compared with expectations for a draw of 2 million barrels.

While the reading comes after an out-sized 9.3 million barrel build in the prior week, it is also the third weekly draw in inventories over the past four weeks. 

These draws pushed up expectations that U.S. oil markets were tightening, especially amid increased exports to fill the supply gap left by Russia and the OPEC. 

Demand in the world’s largest fuel consumer was also seen picking up with the summer driving season approaching.

The official data from the is due later on Wednesday.

BofA lifts its oil price forecasts

Bank of America Global Research has raised its 2024 and WTI oil price forecasts, citing escalating geopolitical tensions and the OPEC+ producer group maintaining supply curbs.

The bank now expects Brent and WTI crude prices this year to average $86 and $81 per barrel respectively, with prices of both peaking around $95 per barrel during the summer.

“We now estimate that improving economic growth expectations have helped push global oil markets into a deficit in 2Q24 and 3Q24 of ~450 thousand barrels per day” BofA said in a research note, which did not include its previous forecasts.

“Geopolitical turmoil has also boosted oil demand via longer trade routes and impacted supply by reducing refining capacity via attacks on Russian energy infrastructure.” the bank said.

(Ambar Warrick contributed to this article.)