Oil jumped to the highest in a week as an industry report showing a continued draw-down in US crude inventories tightened a supply outlook that’s being threatened by rising tension in the Middle East.
Futures in New York rose as much as 2.7 percent on Wednesday, as Federal Reserve Chairman Jerome Powell signaled that policy makers may cut interest rates as soon as this month. The American Petroleum Institute reported nationwide stockpiles fell by 8.13 million barrels last week, according to people familiar with the data.
After plunging almost 5 percent, crude has clawed back those losses as Britain’s seizure of a tanker carrying Iranian crude and the risk of retaliation by the Islamic Republic kept investors wary. A resumption of US-China negotiations is providing some hope the trade war can be resolved, while the Fed’s Jerome Powell started his two-day testimony to Congress, and said uncertainties continue to dim the economic outlook.
“The crude draws reported by the API were much larger than the market was expecting,” said Warren Patterson, a senior commodities strateg-ist at ING Bank NV. “That is the key catalyst behind the move higher.”