Oil Rises to Highest Since 2014 on Bullish U.S. Inventory Report

Crude rose to highest level since 2014 in New York as the drop in U.S. inventories reported by an industry group helped to sustain a rally spurred by geopolitical risks.

Futures in New York rose as much as 2 percent, extending their gain beyond last week’s three-year high. U.S. crude and gasoline inventories fell last week, the American Petroleum Institute was said to report on Tuesday, in contrast to forecasts for a build in U.S. government data later. OPEC and Russia will probably look at ways to prolong their cooperation on cuts when they meet in Saudi Arabia this week.

Oil had fallen earlier this week from the highest in more than three years as geopolitical risks surrounding Syria eased, with Russian President Vladimir Putin now seeking to reduce tensions with the U.S., according to people familiar. The U.S. has started talking to North Korea directly, President Donald Trump said on Tuesday, helping to buoy some equity markets.

“The product draws were a bit surprising,” Tamas Varga, analyst at PVM Oil Associates, said, referring to the drop in gasoline and distillate inventories reported by the API. “As long as the geopolitical premium is here with us we should not sell off.”

West Texas Intermediate for May delivery climbed as much as $1.33 to $67.85 a barrel on the New York Mercantile Exchange, the highest since December 2014. Futures traded at $67.68 at 8:44 a.m. New York time. Total volume traded was about 2 percent above the 100-day average.

Brent for June settlement added $1.13 to $72.71 a barrel on the London-based ICE Futures Europe exchange, after touching $72.84, the highest since April 16. The global benchmark crude traded at a $5.01 premium to June WTI.

U.S. Inventories

Nationwide crude inventories decreased 1.05 million barrels last week in the U.S., the API reported, according to people familiar. A Bloomberg survey before Energy Information Administration data on Wednesday predicts an increase of 650,000 barrels. Stockpiles of gasoline fell by 2.5 million barrels, outpacing the 450,000 barrel increase expected in a Bloomberg survey. Distillate inventories are forecast to fall in the EIA report.

Jeddah Meeting

OPEC and its allies including Russia are scheduled to gather in Jeddah, Saudi Arabia, on April 20 to explore ways of prolonging their cooperation in their efforts to reduce a global glut. Potential measures could include new inventory targets that extend their output cuts, and laying the foundations for an alliance that will last for years.

Other market news:

Saudi Arabia’s crude oil exports rose to 7.251 million barrels a day in February, according to JODI data. U.A.E. Energy Minister says OPEC hopes to attract more producers to cuts deal The Iraqi / Kurdish oil terminal of Ceyhan, Turkey is shut for work, according to a port agent.