Oil jumps as US stockpiles hit lowest level since February 2015

Roughneck
Brian Waldner is covered in mud and oil while wrestling pipe on a
True Company oil drilling rig outside Watford, North
Dakota.

Reuters/Jim
Urquhart

Oil prices jumped Wednesday as data showed a
larger-than-expected drop in US crude inventories. 

West Texas Intermediate rose 0.54% to $69.12 per barrel at 10:45
a.m. ET. Brent, the international benchmark, was up 0.53% to
$74.14 a barrel.

Crude inventories in the US fell by 6.15 million barrels in the
week ending July 20, the Energy Information
Administration said. The drop brings overall US stockpiles to
the lowest point since February 2015.

The drawdown was larger than expected. Analysts had expected a
2.6 million barrel drawdown, while the American Petroleum
Institute — a group that represents oil and gas producers — had
earlier estimated stockpiles fell by 3.2 million barrels. 

Also bolstering prices, tensions between the US and Iran have
been rapidly escalating over the past week. President Donald
Trump
threatened Iran with dire “consequences” on Monday after
President Hassan Rouhani said a conflict between the two
countries would be the “mother of all wars.”

Rouhani said Wednesday that Iran should respond to those tweets
“with action,” according
the Associated Press. The strongest response, he said, would
be “indifference to their plots and choosing to resist and foil
their schemes.”

Trump in May withdrew the US from the Iran nuclear deal, bringing
his administration to demand all
countries stop importing oil from the
Islamic Republic by November or face
secondary sanctions.

In addition to Iranian barrels, the move has also threatened
regional output. Rouhani warned earlier this month he might
disrupt oil shipments in
neighboring countries if the US followed through with such moves.

Administration officials have said in recent weeks that sanctions
waivers may be offered to select countries in efforts to wean the
world off Iranian oil, a tactic was used under the Obama
administration to avoid supply shocks. 

WTI is up 43% this year.

Markets Insider

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