NEW YORK- Oil prices surged more than 2% on Wednesday after a better-than-expected U.S. crude inventories report and as Russia said it would continue its cooperation with OPEC to keep the global oil market balanced.
Prices pulled back slightly after Reuters reported that the first phase of a trade deal between Beijing and Washington might not get done this year, trade experts and people close to the White House said. The 16-month trade war between the world’s top economies is raising concerns about its impact on oil demand.
Brent crude LCOc1 futures settled at $62.40 a barrel, gaining $1.49, or 2.5%, and West Texas Intermediate crude CLc1 settled at $57.11 a barrel, up $1.90, or 3.4%.
U.S. crude oil stocks grew by 1.4 million barrels last week, the Energy Information Administration said, compared with analysts’ expectations for 1.5 million-barrel build and the 6 million-barrel build reported by the American Petroleum Institute late Tuesday.
Crude inventories rose despite refinery runs increasing by 519,000 barrels per day. However, crude in storage at the Cushing, Oklahoma, delivery hub for WTI fell 2.3 million barrels, the biggest drawdown in three months, the EIA said.
“The (crude build) number was not as big as the API, and second of all, the storage draw at Cushing was a whopper. That’s the NYMEX delivery site, so it has an outsized influence,” said Bob Yawger, director of futures at Mizuho in New York.
Oil prices were also supported by comments from Russian President Vladimir Putin that Russia will continue cooperation under a global supply-curbs deal with the Organization of the Petroleum Exporting Countries (OPEC).
OPEC meets on Dec. 5 in Vienna, followed by talks with a group of other exporters, including Russia, known as OPEC+.
Escalating Iran-related tensions also boosted prices.
The U.S. aircraft carrier strike group Abraham Lincoln on Tuesday sailed through the vital Strait of Hormuz, through which a fifth of the world’s oil flows, as leaders in Iran blamed days of protests over fuel price hikes on foreign enemies.
Tensions in the Gulf have risen in the wake of attacks on oil tankers this summer, including off the coast of the United Arab Emirates, and a major attack on key Saudi energy plants which briefly crippled from the world’s top oil exporter.
Iran’s President Hassan Rouhani on Wednesday claimed victory over protests which have left scores reported dead.
“These events contribute to a sense of increasing tensions in the Middle East and explain why we have an uptick in the oil price today,” said SEB chief commodities analyst Bjarne Schieldrop.