AsiaOne has launched EarthOne, a new section dedicated to environmental issues — because we love the planet and we believe science. Find articles like this there.
NEW YORK - Oil prices climbed about two per cent to a two-week high on Wednesday (Oct 18) on a bigger-than-expected US storage draw and concerns about global supplies after Iran called for an oil embargo on Israel over the conflict in Gaza.
Brent futures rose US$1.60 (S$2.20), or 1.8 per cent, to settle at US$91.50 a barrel, while US West Texas Intermediate crude rose US$1.66, or 1.9 per cent, to settle at US$88.32. At their session highs, both benchmarks were up more than US$3 a barrel.
The US Energy Information Administration said energy firms pulled 4.5 million barrels of crude from stockpiles during the week ended Oct 13.
That was much higher than the 0.3 million barrel draw analysts forecast in a Reuters poll. On Tuesday, the American Petroleum Institute industry group reported a 4.4 million barrel drop.
It was the fourth crude storage decline in five weeks. It far exceeded the 1.7 million barrel weekly draw a year earlier and compares with a five-year (2018 to 2022) average build of 2.5 million barrels.
Supplies declined 0.8 million barrels at the Cushing storage facility in Oklahoma to the lowest since October 2014, prompting concerns about the quality of oil remaining at the delivery point for US oil futures.
"The biggest concern in this report is Cushing, Oklahoma ... we're drawing that down to dangerously low levels that should be supportive for the entire complex," said Phil Flynn, an analyst at Price Futures Group.
Flynn noted that prices surged to session highs after Iranian Foreign Minister Hossein Amirabdollahian urged an oil embargo on Israel after hundreds of Palestinians were killed in a blast at a Gaza City hospital. Israeli and Palestinian officials blamed each other.
The Organisation of the Petroleum Exporting Countries (OPEC) is not planning to take any immediate action on OPEC member Iran's call, four sources from the producer group told Reuters.
Jordan canceled a summit it was to host with US President Joe Biden and Egyptian and Palestinian leaders. Biden arrived in Israel on Wednesday pledging solidarity with Israel in its war against Hamas, and backing Israel's account that militants caused the hospital blast.
"This turn of diplomatic fortunes again garners fear of conflict spread and therefore the leap in oil," said John Evans of oil broker PVM.
Oil prices also drew support by official data showing faster-than-expected economic growth in China, the world's biggest oil importer, in the third quarter.
In the US, the world's biggest oil consumer, higher-than-expected September retail sales spurred expectations of another interest rate hike by year-end. Interest rate hikes to curb inflation can slow economic growth and reduce oil demand.
"The latest round of US and Chinese data suggest the world’s two largest economies are supportive for steady or rising crude demand," Edward Moya, senior market analyst at data and analytics firm OANDA, said in a note.
[embed]https://youtu.be/Wc-rt80hROQ[/embed]
ALSO READ: Diplomats renew calls for Gaza aid; Iran warns Israel
