US crude futures surge $1.95/bbl on declining inventories

HOUSTON (ICIS)–NYMEX WTI crude futures for May delivery hit the highest level for 2018 as well as a three-year high, settling at $68.47/bbl, up $1.95 on Wednesday, in response to the weekly supply statistics from the Energy Information Administration (EIA) showing a drawdown in crude oil, gasoline and distillate inventories.

Reports that Saudi Arabia favoured higher oil prices, preferably a target closer to $100/bbl and that Russia and OPEC had issued a declaration of cooperation also provided underlying support.

The market had recently experienced wide swings and had built a geopolitical premium in response to tensions on the Middle East and to the potential trade war between China and the US but both of these issues have eased.

West Texas Intermediate (WTI), the US benchmark, established an intra-day high of $68.54/bbl, up $2.02, and settled just off the top of the range. The benchmark extended the gains in electronic trading afterwards, rising above $68.90/bbl and is now approaching overbought territory.

ICE Brent for June delivery topped out at $73.62/bbl and settled at $73.48/bbl, up $1.90. It also worked higher afterwards, towards $73.90/bbl.