Gulf rumours send US crude oil prices to six-month high
Gulf rumours send US crude to six-month high
Escalating geopolitical tensions and tightening supply caused a jump in oil prices Wednesday, taking US crude futures to a six-month high.
The initial spike was dramatic. Traders said the oil price jumped $5 a barrel – more than 7 per cent – in just seven minutes shortly after the close of US trade on Tuesday, caused by rumours that Iran had fired a missile at a US warship in the Persian Gulf.
The rumour was swiftly denied by the US, but crude prices remained more than 2 per cent higher Wednesday, reminding investors of the fragile geopolitical situation in the Gulf. Edward Meir at Man Financial said: “Although the missile story turned out to be false, the Iranian abduction of British sailors is very real and has yet to play itself out.â€
Markets have become increasingly nervous after 15 British sailors and marines were captured last week. Since then, Nymex crude has risen by nearly 13 per cent on fears the situation would not be solved diplomatically.
Oil prices were also supported by an unexpectedly sharp tightening in supply as data from the US energy department showed stockpiles of crude in the US decreased by 900,000 barrels last week. Crude inventories were expected to have increased by about 1.1m barrels during the period.
Kevin Norrish at Barclays Capital said: “The nervousness of the market in response to the steady ratcheting up of tension with Iran, and a tightening fundamental background provides further evidence that oil price risks are becoming heavily skewed to the upside.â€
By midday in New York, Nymex West Texas Intermediate for May delivery was up $1.53 to $64.46 a barrel, while May ICE Brent climbed $1.53 to $66.13.