You are here
Crude surges to 3 1/2-year high after US stockpiles plunge
[NEW YORK] Oil rose to a level last seen in late 2014 after US crude stockpiles tumbled by the most since September 2016.
Futures rose as much as 3.4 per cent in New York on Wednesday. Domestic crude inventories declined by 9.89 million barrels last week, while refiners boosted oil processing rates and exports soared to a record, the Energy Information Administration said. Oil stored at the key pipeline hub in Cushing, Oklahoma, shrank for a sixth straight week.
Prices already were elevated as US President Donald Trump's administration sought to dissuade purchases of oil from Iran, Opec's third-largest crude producer. The efforts to isolate and hobble the Islamic Republic overshadowed Saudi Arabia's plan to lift oil output to a record within weeks.
"Obviously, a very bullish draw" on American inventories, driven by record crude exports and refinery processing rates, said Nick Holmes, an analyst at Tortoise Capital Advisers in Leawood, Kansas, which manages $16 billion in energy-related assets. "Exports continue to be extremely robust."
Supply risks from Iran to Venezuela have buoyed crude markets, even as the Organization of Petroleum Exporting Countries and allies such as Russia pledged to relax production caps. Record exports of US crude last week indicated American producers were shipping out as much, if not more, oil than Iran, according to Bloomberg calculations.
West Texas Intermediate crude for August delivery climbed US$2.40 to US$72.93 a barrel at 11.48am on the New York Mercantile Exchange, after earlier reaching US$72.95 for the highest intraday price since November 2014.
Brent futures for August settlement advanced US$1.48 to US$77.79 on the London-based ICE Futures Europe exchange. The global benchmark crude was at a US$4.86 premium to WTI.
At least some buyers of Iranian supplies are considering acquiescing to Mr Trump's demand. Japan's Fuji Oil and Taiwan's Formosa Petrochemical are discussing ending imports from the source of 10 per cent of Opec's output, though no final decisions have been made.
The EIA reported that crude exports jumped to 3 million barrels a day last week, while refinery utilisation rates increased to the highest since 2005 and refinery demand for all sorts of feedstocks jumped to a record, all contributing to the crude stockpile decline.