Oil climbed for a third day — the longest run of gains in three weeks — as falling U.S. gasoline stockpiles supported the demand outlook and simmering tensions in the Middle East kept investors on edge.
Futures in New York rose as much as 1.1% after adding 1.6% over the previous two sessions. American gasoline inventories dropped by 1.12 million barrels last week, more than three times as much as forecast, official data showed Wednesday. In the Persian Gulf, Saudi Arabia restarted its main cross-country oil pipeline after a drone attack by Iran-backed rebels, while the U.S. ordered all non-emergency staff to leave Iraq due to an “increased threat stream.”
The pipeline incident, and a recent attack on oil tankers, have highlighted the vulnerability of energy infrastructure to a major conflict in the Middle East as relations between the U.S. and Iran deteriorate. Yet Washington and Beijing’s intensifying trade war has kept a lid on price gains, while a meeting of the Organization for Petroleum Exporting Countries and its allies in Jeddah this weekend may provide clues on whether output cuts will be extended.
“The growing tensions between the U.S. and Iran now appear to be boosting oil prices after all,” said Carsten Fritsch, an analyst at Commerzbank AG in Frankfurt.
West Texas Intermediate crude for June delivery increased 43 cents, or 0.7%, to $62.45 a barrel on the New York Mercantile Exchange at 10:45 a.m. London time. It’s headed for the highest close in more than two weeks after finishing up 0.4% on Wednesday.
Brent for July settlement rose 36 cents, or 0.5%, to $72.13 a barrel on the London-based ICE Futures Europe exchange after advancing 0.7% on Wednesday. The global crude benchmark traded at a $9.47 premium to WTI, near the widest gap since February.
While American gasoline inventories fell last week, nationwide crude stockpiles increased by more than 5.4 million barrels to 472 million barrels, according to Energy Information Administration data. Inventories at the storage hub of Cushing rose for a fourth week.
The tension in the Middle East has risen this month after the White House moved to try and squeeze Iranian oil exports to zero. On Thursday, Saudi Arabia accused Iran of ordering the drone attacks by Yemen’s Houthi rebels, while the kingdom’s foreign minister said Houthis were an “indivisible part” of Iran’s Revolutionary Guard.
The U.S. embassy in Baghdad said Wednesday that most employees there and at the consulate in Erbil, in Iraq’s majority-Kurdish region, will leave. Meanwhile, the Iraqi Oil Ministry denied a report that Exxon Mobil Corp. employees were being pulled out of the country.
Other oil-market news: U.S. crude is reaching new destinations around the world after Chinese buying slowed amid concern the trade dispute between the countries could result in a tax on American oil. Global oil demand will grow more slowly than previously thought following an economic lull in Asia, the International Energy Agency said, while warning that supplies will likely tighten due to U.S. sanctions on Iran.