HOUSTON (ICIS)--NYMEX WTI crude futures for June delivery hit fresh 2018 highs and settled at $71.14/bbl, up $2.08 on Wednesday, after Washington unilaterally withdrew from the nuclear agreement with Iran, raising concerns that the change in policy carries risk of conflict in the Middle East.Pictured: Oil production in Iran. (Source: AY-COLLECTION/SIPA/REX/Shutterstock)
US President Donald Trump is also prepared to re-impose sanctions after 180 days that may curtail Iran’s oil exports and tighten global supplies.
Also providing underlying support, the weekly supply statistics from the Energy Information Administration (EIA) revealed a much greater than forecast drawdown in crude oil gasoline and distillate inventories.
The US dollar eased from recent highs showing signs of exhaustion, and a weaker dollar also makes dollar denominated commodities cheaper and encourages buying.
The EIA data also showed a crude build at the Cushing, Oklahoma NYMEX delivery hub and US oil production hitting a new high of 10.7m bb/day, but this had limited impact on the day’s rally.
Upside momentum penetrated key technical barriers, triggering buy-stops and extending the gains.
West Texas Intermediate (WTI), the US benchmark, established an intra-day high of $71.36/bbl, up $2.30 before retreating on profit-taking.
The ICE Brent contract for July delivery topped out at $77.43/bbl and settled at $77.21/bbl, up $2.36.