Oil Up on Falling Stockpile Report, Iran Tension
(Bloomberg) -- Oil jumped the most in a week as an industry report showing a continued draw-down in U.S. crude inventories tightened a supply outlook that’s being threatened by rising tension in the Middle East.
Futures in New York rose as much as 1.8% after closing up 0.3% Tuesday. The American Petroleum Institute reported nationwide stockpiles fell by 8.13 million barrels last week, according to people familiar with the data. That’s more than the median estimate for a 2.9 million barrel drop in a Bloomberg survey before Energy Information Administration figures due Wednesday.
After plunging almost 5% last Tuesday, crude has clawed back most of those losses as Britain’s seizure of a tanker carrying Iranian crude and the risk of retaliation by the Islamic Republic kept investors wary. A resumption of U.S.-China negotiations is providing some hope the trade war can be contained, while Federal Reserve Chairman Jerome Powell’s two-day testimony to Congress that starts Wednesday will be watched closely for clues on rate cuts.
“The declining American inventories and Iran’s warmongering rhetoric pave the road further for bulls to make a comeback,” said Howie Lee, an economist at Oversea-Chinese Banking Corp. in Singapore. “But it promises to be a bumpy road ahead as there’s still a lot of concern about declining energy demand.”
West Texas Intermediate crude for August delivery gained 91 cents, or 1.6%, to $58.74 a barrel on the New York Mercantile Exchange as of 7:40 a.m. in London after rising as much as $1.01 earlier. The contract has rallied 4.4% since last Tuesday’s close.
Brent for September settlement increased 71 cents, or 1.1%, to $64.87 a barrel on the ICE Futures Europe Exchange. The contract closed 0.1% higher on Tuesday. The global benchmark crude traded at a $6.01 premium to WTI for the same month.
If the API report is confirmed by the EIA data, it will be the fourth consecutive weekly drop in U.S. crude inventories. The stockpiles have shrunk by 3.5% since reaching the highest level in almost two years in the week through June 7.
There have been six oil tankers attacked near the Strait of Hormuz since the middle of May, raising tension around the biggest global choke-point for crude. The chief of staff for Iran’s armed forces vowed on Tuesday to respond to Britain’s seizure of the tanker, highlighting the risks to shipping in a waterway that about a third of all seaborne petroleum travels through.
--With assistance from James Thornhill.
To contact the reporter on this story:
Sharon Cho in Singapore at email@example.com
To contact the editors responsible for this story:
Serene Cheong at firstname.lastname@example.org
Andrew Janes, Ben Sharples
WHAT DO YOU THINK?
Generated by readers, the comments included herein do not reflect the views and opinions of Rigzone. All comments are subject to editorial review. Off-topic, inappropriate or insulting comments will be removed.