Oil Steadies After Rally Fueled by Trade Optimism, Iran Remarks
Oil steadied after the biggest four-day rally since October, spurred by trade-war optimism and US President Donald Trump’s increasingly hostile rhetoric on Iranian supply,
Brent traded near $66 a barrel after gaining almost 10% in the previous four sessions, while West Texas Intermediate was above $63. Trump said during a visit to Saudi Arabia that the US will exert maximum pressure on Iranian energy exports if an agreement isn’t reached on the OPEC member’s nuclear program, after the State Department earlier sanctioned a network that helps ship the Islamic Republic’s oil to China.
The hawkish comments on Iran added to a rebound driven by softer-than-expected US inflation and lingering relief from easing trade tensions between America and China. Futures have rallied from a four-year low on a closing basis at the beginning of last week, but are still down more than 10% this year.
Trump is visiting the Middle East this week hoping to strike deals with countries including Saudi Arabia. The kingdom — the de-facto leader of the Organization of the Petroleum Exporting Countries and its allies — has pushed for the cartel to increase production to punish non-compliant members, with a further boost expected at a June 1 meeting that will exacerbate concerns over a glut.
Trump also said the US will lift its sanctions against Syria following the toppling of former President Bashar al-Assad. The Middle Eastern nation pumped almost 400,000 barrels a day of crude before its civil war erupted in 2011, but production has since slumped and many fields are in the hands of Kurdish forces rather than the central government.
Meanwhile, the American Petroleum Institute said US crude inventories rose by 4.29 million barrels last week. That would be the biggest increase since March if confirmed by official data later Wednesday.
Source: Bloomberg
