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.
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.