Oil. Picture: REUTERS
Oil. Picture: REUTERS

Sydney — Oil prices rose more than 1% on Wednesday to their highest in nearly a month as industry data showed US crude stockpiles fell more than expected, underpinning a market already buoyed by worries over a potential US-Iran conflict.

Front-month Brent crude futures, the international benchmark for oil, were up 1.3% at $65.91 by 3.41am GMT. They earlier touched their highest level since May 31 at $66 a barrel.

US West Texas Intermediate (WTI) crude futures were at $58.98 per barrel, up 1.8% from their last settlement. WTI earlier hit its strongest level since May 30 at $59.03 a barrel.

Analysts said the gains were mainly driven by American Petroleum Institute (API) data showing a fall in US crude inventories.

US crude stockpiles fell by 7.5-million barrels in the week ended June 21 to 474.5-million, compared with analyst expectations for a decline of 2.5-million barrels, the data showed. Crude stocks at US delivery hub Cushing, Oklahoma, fell by 1.3-million barrels.

“Oil prices went ballistic after the API report,” said Stephen Innes, a managing partner at Vanguard Markets.

“Oil prices have been squeezing higher on escalating tensions in the Middle East. But with late-day draws showing up in the API report, this is a strong signal for the energy market,” Innes said.

The data came as traders watched for any signs that tensions between the US and Iran could escalate into military conflict.

On Tuesday US President Donald Trump threatened to obliterate parts of Iran if it attacked “anything American”, in a new war of words with Iran. Tehran has condemned a fresh round of US sanctions as “mentally retarded”.

Bilateral tensions between the two have spiked anew after Iran shot down a US drone last week in the Gulf. Relations have been tense since Washington blamed May and June attacks on oil tankers just outside the Gulf on Iran, while Tehran has repeatedly said it had no role in the incidents.

Conflict between Washington and Tehran has stoked fears that shipments passing through the Strait of Hormuz, the world’s busiest oil supply route, could be disrupted.

Seeking to calm a nervous market, the head of national oil company Saudi Aramco said on Tuesday the company can meet the oil needs of customers using its spare capacity. 

Reuters