Crude oil prices rise on geopolitical worries

NEW YORK — Crude oil prices rose on Wednesday despite data showing rising US inventories, holding within sight of three-year highs reached the previous day on geopolitical tensions including the prospect of fresh sanctions on Iran.

French President Emmanuel Macron forcefully challenged many of the US president’s policies during a visit to Washington, saying an international nuclear deal with Iran, which President Donald Trump has harshly criticized, was not perfect but must remain in place until a replacement is forged. Mr. Trump will decide by May 12 whether to restore US sanctions on Tehran, which could be a first step to ending the deal.

The market was also supported by concerns around oil output from Venezuela. US oil major Chevron Corp. has evacuated executives from Venezuela after two of its workers were imprisoned over a contract dispute with state- owned oil company PDVSA, according to four sources familiar with the matter.

“The geopolitical risk in the market has a pretty high premium,” said Gene McGillian, vicepresident of research at Tradition Energy. “Even with this week’s Department of Energy numbers it hasn’t shaken any of the confidence that the global supply and demand balance continue to tighten.”

Brent crude settled 14 cents higher at $74.00 a barrel, below the November 2014 intraday high of $75.47 reached on Tuesday. US crude futures ended up 35 cents at $68.05 a barrel.

The market rebounded quickly from a dip after bearish US inventory data because the build was not as large as it could have been, given the jump in exports, Mr. McGillian said.

Crude inventories rose 2.2 million barrels last week, compared with expectations for a two million-barrel draw. Crude stocks at the Cushing, Oklahoma, delivery hub rose 459,000 barrels, EIA said.

A rise in US government borrowing costs to their highest since 2013 this week has tempered some investor appetite for risk, but analysts said Brent crude futures, the global benchmark, may yet rise toward new 2018 peaks above $75 a barrel.

Supplier cutbacks, steady demand growth, geopolitical tensions and a favorable structure in the futures market have attracted record investment in oil this year.

Money managers hold record positions in Brent crude futures and options, lured by the hefty premium of the front-month June contract over subsequent months that makes it profitable to invest in crude over the longer term.

The forward curve for Brent is now above $70 until end of 2018, and prices are above $60 through 2020.

But the rise in US Treasury yields above 3% has driven the dollar to three-month highs, making oil more expensive for buyers using other currencies. This might eventually pressure crude prices, even though oil and the dollar have moved in tandem for a few weeks. —