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

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.

“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.

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.