Stockpile drop lifts oil to highest price since 2014
Oil jumped Wednesday to a level last seen in late 2014 after U.S. crude stockpiles tumbled by the most in almost two years.
Futures rose 3.2 percent in New York. Domestic crude inventories declined by 9.89 million barrels last week, as refiners boosted oil processing rates and exports soared to a record, the Energy Information Administration said. Oil stored at the key pipeline hub in Cushing, Okla., shrank for a sixth straight week.
Prices already had been rallying as President Donald Trump’s administration sought to dissuade purchases of oil from Iran, OPEC’s third-largest crude producer. The efforts to isolate and hobble the Islamic Republic overshadowed Saudi Arabia’s plan to lift oil output to a record within weeks.
“Obviously, a very bullish draw” on American inventories, driven by record crude exports and refinery-processing rates, said Nick Holmes, an analyst at Tortoise in Leawood, Kan., which manages $16 billion in energy-related assets. “Exports continue to be extremely robust.”
Supply risks from Iran to Venezuela have buoyed crude markets, even as the Organization of the Petroleum Exporting Countries and Russia pledged to relax production caps. Record exports of U.S. crude last week indicated American producers were shipping out as much, if not more, oil than Iran, according to Bloomberg calculations.
Overseas demand for U.S. crude will persist as sanctions cut into Iran’s market share, Venezuelan production continues to collapse, and the Saudis stretch their output capacity, Holmes said. “Spare capacity, globally, is pretty thin and that bodes well for prices.”
West Texas Intermediate crude for August delivery climbed $2.23 to settle at $72.76 a barrel on the New York Mercantile Exchange.