Oil Rises as Speculation on Iran Deal Counters Stockpile Gains

Oil advanced as President Donald Trump’s potential exit from the Iran nuclear deal increased concern over Middle East supplies, overshadowing expanding U.S. crude output and stockpiles.

Futures gained 0.8 percent in New York after climbing 0.5 percent Wednesday. French President Emmanuel Macron predicted Trump will pull out of the Iran accord. A revival of sanctions is expected to cut oil exports from the third-largest OPEC producer. Meanwhile, investors largely shrugged off a government report showing record American crude production and a build in nationwide inventories.

Crude rallied to a three-year high this month as geopolitical tensions in the energy-rich Middle East persist, with Trump set to decide whether to reimpose sanctions on Iran on May 12. While the Organization of Petroleum Exporting Countries is succeeding in curtailing a global glut, the specter of surging U.S. output, which has topped 10 million barrels a day every week since early February, continues to counteract the group’s efforts.

“It now seems likely that Trump will dump the deal in order to start new negotiations with a clean slate,” said Bjarne Schieldrop, chief commodities analyst at SEB AB.

West Texas Intermediate crude for June delivery traded at $68.59 on the New York Mercantile Exchange, up 54 cents, at 8:21 a.m. local time. The contract climbed 35 cents to $68.05 on Wednesday. Total volume traded was about 7 percent below the 100-day average.

Brent crude for June delivery rose 76 cents, or 1 percent, to $74.76 a barrel on the London-based ICE Futures Europe exchange. Prices on Wednesday added 0.2 percent to $74. The global benchmark crude traded at a $6.18 premium to WTI.

Futures for September delivery slipped 0.9 percent to 439.4 yuan a barrel on the Shanghai International Energy Exchange. The contract retreated 2.1 percent Wednesday, the biggest decline since April 3.

A U.S. withdrawal from the Iran deal isn’t supported by any of the other five countries that are part of the agreement. It would lead to a period of increased tensions and uncertainty, Macron said. His comments came a day after he proposed additional agreements that would try to address many of Trump’s concerns. Iran’s current production is about 1 million barrels a day higher than during the last period of sanctions from 2012 to 2015.

In the U.S., the Energy Information Administration reported crude stockpiles rose 2.17 million barrels last week, in contrast to a forecast for a 2.2 million-barrel decline. The nation’s oil production expanded for nine consecutive weeks to 10.6 million barrels a day, the highest level in the EIA’s weekly data compiled since 1983.

Oil-market news

Production has fully recovered after an attack on Saturday at the crude pipeline connecting Waha Oil Co.’s deposit to Libya’s Es Sider export terminal, according to a person familiar with the situation. Gasoline futures are up 0.6 percent to $2.1018 a gallon, after losing 1.6 percent in the past two sessions. The U.S. is on an upward march to become the world’s top oil exporter, perhaps in 2019, Citigroup Inc. said in an April 25 note. Royal Dutch Shell Plc and Total SA reported the highest profit in years thanks to higher crude prices, although shares in the Anglo-Dutch company fell as investors fretted about the timing of share buybacks.