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Oil Rallies as US Crude Inventories Post Bigger-Than-Expected Decline

July 25, 2018 at 16:07 by Andrew Moran

Oil futures are rallying on Wednesday after the US government reported that domestic stockpiles recorded a bigger-than-expected decline. Crude prices may also find support in renewed tensions between the US and Iran as both sides engage in a war of words.

September West Texas Intermediate (WTI) crude futures surged $0.55, or 0.87%, to $69.07 per barrel at 15:38 GMT on Wednesday on the New York Mercantile Exchange. Year-to-date, US crude prices have rallied 17%, as well as posting an impressive 40% gain over the last 12 months.

Brent, the international benchmark for oil prices, is also recording admirable gains midweek. September Brent crude futures rose $0.43, or 0.59%, to $73.90 a barrel on London’s ICE Futures exchange. Brent crude prices have skyrocketed 14% so far in 2018.

According to the US Energy Information Administration (EIA), domestic crude supplies tumbled by 6.1 million barrels for the week ending July 20, while US output has topped 11 million barrels per day (bpd). Gasoline supplies dipped by 2.3 million barrels, while distillate stockpiles fell 100,000 barrels.

In recent months, there have been renewed tensions between Washington and Tehran. In May, President Donald Trump scrapped a 2015 international agreement to curtail the Middle East nation’s nuclear program. The president has also warned to impose harsh restrictions and sanctions on Iran, which could threaten its crude exports that total more than 2.5 million bpd.

Earlier this month, Trump took to Twitter in an all-caps rage tweet directed at President Hassan Rouhani:

To Iranian President Rouhani: NEVER, EVER THREATEN THE UNITED STATES AGAIN OR YOU WILL SUFFER CONSEQUENCES THE LIKES OF WHICH FEW THROUGHOUT HISTORY HAVE EVER SUFFERED BEFORE. WE ARE NO LONGER A COUNTRY THAT WILL STAND FOR YOUR DEMENTED WORDS OF VIOLENCE & DEATH. BE CAUTIOUS!

In other energy commodities on Wednesday, September natural gas futures advanced $0.03, or 1.10%, to $2.749 per British thermal units (btu). September gasoline futures jumped $0.02, or 1%, to $2.08 per gallon. September heating oil futures climbed $0.01, or 0.50%, to $2.148 a gallon.

If you have any questions and comments on the commodities today, use the form below to reply.

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