Crude Oil Advances Amid Lower U.S. Supply, Middle East Violence

Updated on

Crude oil rose amid signs a U.S. glut is easing and on concern that violence in the Middle East will worsen.

U.S. crude inventories have fallen for three straight weeks after rising to a record last month, Energy Department data show. Violence flared in OPEC’s two biggest members Iraq and Saudi Arabia, raising tensions ahead of the producer group’s meeting on June 5 in Vienna.

“The worst of the inventory build in North America may be over,” Bart Malek, an analyst at TD Securities in Toronto, said by phone. “That in combo with expectations that the U.S. economy may do OK is helping to keep crude up a little bit.”

Brent crude for July settlement rose 15 cents to close at $65.52 on the ICE Futures Europe exchange, after gaining as much as 1.3 percent to $66.22. West Texas Intermediate gained 10 cents to $59.82 at the 1 p.m. close of electronic trading on the New York Mercantile Exchange. The European benchmark crude traded at a premium of $5.89 to WTI on ICE.

U.S. Federal Reserve Vice Chairman Stanley Fischer said Monday a decision to raise interest rates will be “data determined” after unemployment fell to its lowest in almost seven years.

Saudi Arabia’s King Salman vowed to punish those responsible for Friday’s suicide bombing in the world’s biggest crude producing country. The Islamic State claimed responsibility for the bombing that killed 21 people. The fall of the Iraqi city of Ramadi, about 70 miles (110 kilometers) west of Baghdad, to Islamic State fighters is one of the militants’ biggest successes since they swept across the north of the country a year ago.

Libya Conflict

Warplanes belonging to Libya’s internationally recognized government bombed a gasoil tanker at a port controlled by the North African nation’s rival Islamist leaders, the regional coastguard commander said.

OPEC in November resisted calls to cut output to support prices, maintaining its collective target at 30 million barrels a day. The 12-member Organization of Petroleum Exporting Countries pumped 31.3 million a day in April, exceeding its target for an 11th consecutive month, a Bloomberg survey of companies and analysts showed.

All but one of the 34 analysts and traders surveyed by Bloomberg said the group will maintain the target when it meets in Vienna on June 5.

A forest fire in Alberta shut about 10 percent of oil-sands production in Canada, the world’s fifth-biggest crude producer.

There was no floor session at the U.S. exchange on Monday because of the Memorial Day holiday, and transactions will be booked Tuesday for settlement purposes.

Before it's here, it's on the Bloomberg Terminal. LEARN MORE