Finance

Oil jumps 3% to above $65 on growing Middle East tensions

Oil jumps 3% to above $65 on growing Middle East tensions

USA crude inventories fell by 4.6 million barrels last week, compared with analysts' expectations for an increase of 246,000 barrels, EIA data showed on Wednesday.

Oil prices extended gains on Tuesday, as the trade spat between the U.S. and China showed signs of getting settled without causing any harm to the global economy.

Brent crude futures were up 39 cents on the day at $67.50 a barrel by 0912 GMT.

Oil markets stabilised on Monday after slumping about 2% last Friday on the concern over an intensifying trade dispute between the U.S. and China, as well as increased U.S. drilling activity.

Analysts said Xi's comments greatly relieved market anxiety for a potential trade war between the world's two largest economies.

President Xi Jinping on Tuesday promised to open China's economy further and lower import tariffs, striking a conciliatory tone on the trade tensions between his country and the United States.

Analysts and traders have recently warned that booming US shale oil production could potentially derail OPEC's effort to end a supply glut.

USA crude inventories rose by 1.8 million barrels in the week to April 6 to 429.1 million, according to a report by the American Petroleum Institute (API) on Tuesday, compared with analysts' expectations for a decrease of 189,000 barrels.




Oil prices have generally been supported by healthy demand as well as by supply restraint led by oil cartel Opec, which started in 2017 in order to rein in oversupply and prop up prices.

The American Petroleum Institute will publish storage data later on Tuesday while official data from the U.S. Energy Information Administration is due on Wednesday.

Previous US sanctions has already hit Iran's production by more than 1.2 million barrels per day (bpd).

Monthly oil reports are also due out from the Organization of the Petroleum Exporting Countries on Thursday and the International Energy Agency on Friday.

JPMorgan said it expects Brent and WTI prices to average $69.50 and $65.20 per barrel in 2018, respectively, while it forecasts $64 per barrel for Brent and $58.50 per barrel for WTI in 2019.

The report comes a week after Crown Prince Mohammed first told Time magazine that he expected Aramco's public launch to coincide with higher oil prices.

Still, growing USA crude stockpile, which has risen since mid-2016 to 10.46 million bpd, have become a hindrance to OPEC's plan to contain the supply glut and bolster prices.


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