Oil Prices Hit Hi­ghest Since 2014

L'Opinion - - The Wall Street Journal & LOpinion -

Oil sur­ged to the hi­ghest le­vels in more than three years as ten­sions sim­me­red in the Middle East, si­gna­ling op­ti­mism that a glut that has crip­pled the mar­ket for years is en­ding.

U. S. crude fu­tures jum­ped $ 1.31, or 2%, to $ 66.82 a bar­rel Wed­nes­day on the New York Mer­can­tile Ex­change. Brent, the glo­bal bench­mark, rose $1.02, or 1.4%, to $72.06 a bar­rel on ICE Fu­tures Eu­rope. Both bench­marks are at their hi­ghest le­vels since De­cem­ber 2014.

More than a year’s worth of pro­duc­tion cuts by the Or­ga­ni­za­tion of the Pe­tro­leum Ex­por­ting Coun­tries has hel­ped set the stage for this ral­ly, gra­dual­ly whit­tling away at a glut that kept prices low for more than three years. Ve­ne­zue­la’s oil out­put is al­so in free­fall as the coun­try’s eco­no­mic tur­moil dee­pens. With the pros­pect of re­ne­wed sanc­tions against Iran, some ana­lysts and in­ves­tors say prices are poi­sed to climb even hi­gher.

Ga­ry Ross, glo­bal head of oil ana­ly­tics and chief ener­gy eco­no­mist at S&P Glo­bal Platts, has been pre­dic­ting that Brent prices would rise to $75 to $80. He said Wed­nes­day that a “per­fect storm” of fal­ling sup­plies and geo­po­li­ti­cal sa­ber rat­tling could push prices even hi­gher.

“What’s un­fol­ding is an ex­tra­or­di­na­ri­ly vul­ne­rable si­tua­tion for the mar­ket—you’re at great risk of a price spike if so­me­thing unex­pec­ted hap­pens,” he said. “We have no cu­shion.”

Af­ter lan­gui­shing for years, oil prices sur­ged in the fi­nal months of last year.

This year, crude has been a bright spot com­pa­red with other stag­na­ting mar­kets. The S&P 500, the U.S. stocks bench­mark, is down 1.18% af­ter a 19% ral­ly in 2017.

Still, gains in oil prices ha­ven’t been that im­pres­sive— in the first quar­ter, U. S. bench­mark prices rose about 7.5%, and the glo­bal price rose about 5%. Prices have been firm­ly ens­con­ced bet­ween $60 and $70.

But the mo­men­tum shif­ted this week. Both bench­marks have clim­bed more than 7%— their best three- day per­iod since De­cem­ber 2016.

Es­ca­la­ting conflicts in the Middle East took cen­ter stage as ten­sions rose to­ward a boi­ling point. Af­ter an al­le­ged che­mi­cal-wea­pons at­tack on a re­bel­held Sy­rian town over the wee­kend, Pre­sident Do­nald Trump war­ned Wed­nes­day that U. S. mis­siles “will be co­ming” to Sy­ria. And Sau­di Ara­bia’s air- de­fense forces said in state me­dia that they in­ter­cep­ted a mis­sile over the ca­pi­tal ci­ty of Riyadh, which hel­ped rat­chet prices even hi­gher.

Conflicts that could in­ter­fere with oil pro­duc­tion have ta­ken on re­ne­wed im­por­tance in the oil mar­ket in recent months as a glut that ac­ted as a buf­fer against sup­ply shocks has dis­si­pa­ted.

The In­ter­na­tio­nal Ener­gy Agen­cy said last month that pe­tro­leum stock­piles in the in

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