Oil prices rise amid tension in Middle East
LONDON, May 16, 2019 – Oil prices extended gains on Thursday in Asia amid tensions in the Middle East linked to stealth attacks on Saudi oil tankers and pipelines.
US Crude Oil WTI Futures rose 0.7% to $62.45 by 12:20 AM ET (04:20 GMT). International Brent Oil Futures gained 0.6% to $72.22.
Intensifying tensions in the Middle East were cited as pushing oil prices higher.
“(Middle East tensions have intensified), with the US ready to apply pressure in Tehran and evacuating its embassy in Iraq due to security concerns,” said Alfonso Esparza, senior market analyst at OANDA, at a Reuters report.
Meanwhile, the Energy Information Administration reported a surprise increase in US stockpiles, but the inventory data was largely overshadowed by the crisis in Middle East.
US commercial crude oil inventories (excluding those in the Strategic Petroleum Reserve) rose by 5.4 million barrels last week, versus expectations for a decline of 800,000 barrels, the EIA said Wednesday.
In the previous week, crude inventories fell by almost 4 million barrels.
“While draws were expected across the whole complex, we saw builds almost across everywhere,” said Tariq Zahir, who runs New York-focused oil fund Tyche Capital Advisors.
“We had an eye-opening 5.4-million-barrel build in crude where a draw was expected of 1.1 million. This 6-million-barrel surprise should keep a lid on prices. (That’s) coupled with the fact that IEA also reported a revision down in demand for crude and the large Cushing build, which was also a surprise.”
An report published by the American Petroleum Institute sent both WTI and Brent lower on Wednesday as it said US crude stockpiles surged more than 8 million barrels last week versus a drawdown expected by the market.
In other news, the Paris-based International Energy Agency said in its monthly report that it predicts the world will require very little extra oil from OPEC this year as booming US output will offset falling exports from Iran and Venezuela.
The IEA estimated growth in global oil demand to average 1.3 million barrels per day in 2019. In contrast, U.S. production of oil and condensates alone was forecast to rise by an average of 1.7 million bpd this year, it said.