Oil’s Bumper Four-Day Gain Cools With Focus On Trade And Iran
Oil dipped for the first time in five sessions, stalling a rally spurred by the US-China trade détente and President Donald Trump's hostile rhetoric on Iranian supply.
Brent dipped marginally near $66 a barrel after gaining almost 10% in the prior four sessions. West Texas Intermediate hovered around $63. Trump reiterated Wednesday that Tehran can't have a nuclear weapon — while Iran's foreign minister urged the US to take a “more realistic” approach to talks.
The friction comes a day after Trump said during a visit to Saudi Arabia that he'll drive Iran's oil exports to zero if a nuclear agreement can't be reached. Washington also announced new sanctions on a shipping network it said was moving billions of dollars' worth of the Persian Gulf state's oil.
Trump's hawkish rhetoric added to a rebound driven by softer-than-expected US inflation and lingering relief from easing trade tensions between Washington and Beijing.
Oil futures have rallied from a four-year low on a closing basis at the beginning of last week. They're still down more than 10% this year, underperforming major equity markets.
Elsewhere, the American Petroleum Institute said US crude inventories rose by 4.29 million barrels last week. That would be the biggest increase since March if confirmed in official data later Wednesday.
“The slight retreat this morning is the function of a surprise crude build,” Tamas Varga, an analyst at brokerage PVM Oil Associates Ltd., wrote in a note. “The weekend's deal with China is probably the pinnacle of what we will see in the foreseeable future with a decent chance of flare-ups in acrimony leading to increased excise duties once again.”
Trump is visiting the Middle East this week, hoping to strike deals with countries including Saudi Arabia.
The kingdom — the de-facto leader of the Organization of the Petroleum Exporting Countries and its allies — has pushed the club to increase output to punish noncompliant members. A further boost expected at a June 1 meeting would add to concerns about a surplus.
The group's monthly report showed a careful start to those increases in April. OPEC and its allies added just 25,000 barrels a day last month, a fraction of the scheduled 138,000 barrels a day.
Prices:
Brent for July settlement slipped 1% to $65.99 a barrel at 8:50 a.m. in New York.
WTI for June delivery declined 1% to $63.05 a barrel
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