Oil up after US rules out tapping emergency pile
singapore/london — Oil climbed after the US energy secretary ruled out the release of emergency crude reserves, adding to concerns that the loss of Iranian supplies will tighten markets.
Futures in New York climbed as much as 1.4 per cent. Energy Secretary Rick Perry said on Wednesday the government isn’t planning to tap emergency oil stockpiles to prevent prices from surging when American sanctions on Iranian crude are implemented in early November. Total’s chief executive said prices may be heading for $100 a barrel, but warned this could hurt demand.
US crude is nearing four-year highs after the Opec signalled the group is in no rush to boost production to counter losses from Iran, drawing repeated criticism from President Donald Trump. Top trading houses are predicting the return of $100 oil, last seen in 2014, while Bank of America and JPMorgan Chase & Co have increased their forecasts.
“The latest move higher started with the comments of Secretary Perry last night, as some in the market were hoping for an SPR release,” said Giovanni Staunovo, an analyst at UBS Group in Zurich.
“Market sentiment is extremely bullish at the moment. For me, the biggest concern is whether Saudi production needs to go into unchartered territory, and how market participants will react.”
West Texas Intermediate crude for November delivery rose as much as $1.04 to $72.60 a barrel on the New York Mercantile Exchange and traded at $72.28 at 9:45am in London. The contract settled 71¢ lower at $71.57 on Wednesday. Total volume traded was 9 per cent below the 100-day average.
Brent for November settlement gained as much as $1.10 to $82.44 a barrel on the London-based ICE Futures Europe exchange. The global benchmark crude was at a $9.83 premium to WTI.
Releasing oil from the nation’s Strategic Petroleum Reserve to prevent a price spike would have “a fairly minor and short-term impact”, secretary Perry said.
Other producers can offset losses from the Gulf state, he added. —