Escalating geopolitical risks in the Middle East are proving to be a boon for oil prices, with speculation over supply disruptions in the energy-rich region countering concerns over rising U.S. crude stockpiles.
Futures in New York increased as much as 0.8 percent after jumping 2 percent on Wednesday to the highest level since 2014. Saudi Arabia, the world’s biggest oil exporter, intercepted a ballistic missile fired by pro-Iranian Yemeni rebels over the kingdom’s capital just hours after President Donald Trump warned America is preparing to strike Syria. Meanwhile, investors largely shrugged off a U.S. government report showing a surprise gain in nationwide crude inventories.
A measure of oil price volatility also jumped on Wednesday on speculation rising conflict in the Middle East may hinder crude output and shrink a global glut, sending prices above the highs of January. Meanwhile, concerns remain that surging U.S. crude production will damp efforts by the Organization of Petroleum Exporting Countries and its allies to tighten the market and prop up prices.
West Texas Intermediate for May delivery was at $67.15 a barrel on the New York Mercantile Exchange, up 33 cents at 2:39 p.m. in Singapore. Prices are headed toward a fourth straight gain for their longest winning streak since February. The contract climbed $1.31 to $66.82 on Wednesday, the highest since December 2014. Total volume traded was about 11 percent above the 100-day average.
Brent for June settlement gained 17 cents to $72.23 a barrel on the London-based ICE Futures Europe exchange. The contract rose $1.02 to close at $72.06 on Wednesday. The global benchmark crude traded at a $5.21 premium to June WTI.