NEW YORK (Reuters) – The U.S. oil prices rose around 2% to a two-week high on Wednesday, thanks to a larger-than-expected drop in US storage and session highs after Iran called for an oil embargo against Israel.
Brent crude futures were up $1.92, or 2.1%, to $91.82 a barrel as of 1:24 p.m. EDT (1724 GMT). West Texas Intermediate (WTI) crude in the United States climbed $2.09, or 2.4%, to $88.75. Both benchmarks were up more than $3 per barrel at their session highs.
The Oil Information Administration (EIA) reported that oil companies removed 4.5 million barrels of petroleum from stocks for the week ending Oct. 13. [EIA/S]
This was far greater than the 0.3 million barrel draw predicted by economists in a Reuters survey. The American Petroleum Institute (API) industry body reported a 4.4 million barrel decline on Tuesday. [API/S]
It was the fourth weekly loss in petroleum storage in five weeks, significantly above the 1.7 million barrel weekly draw a year ago and the five-year average gain of 2.5 million barrels.
Supplies at the Cushing storage facility in Oklahoma fell by 0.8 million barrels to the lowest level since October 2014, raising worries about the quality of oil left at the delivery point for U.S. oil futures.
“The most serious issue in this study is Cushing, Oklahoma… we’re pulling it down to dangerously low levels that should be beneficial to the entire complex.,” said Price Futures Group analyst Phil Flynn.
MIDDLE EAST TENSIONS
Flynn observed that prices rose to session highs after Iranian Foreign Minister Hossein Amirabdollahian called for an oil embargo on Israel following the deaths of hundreds of Palestinians in a hospital bombing in Gaza City. Officials from Israel and Palestine blamed each other.
According to four sources inside the Organization of Petroleum Exporting Countries (OPEC), the producer group does not intend to take quick action in response to OPEC member Iran’s appeal.
Jordan has canceled a planned conference with US Vice President Joe Biden, and Egyptian and Palestinian leaders. Biden landed in Israel on Wednesday, promising unity with Israel in its fight against Hamas and supporting Israel’s claim that terrorists were responsible for the hospital bomb.
Official figures also bolstered oil prices indicating faster-than-expected third-quarter economic growth in China, the world’s largest oil importer.
