Oil extended gains as investors assessed geopolitical risks with speculation that the USA president and Saudi Arabia's crown prince discussed countering the influence of Middle East producer Iran.
According to the U.S. Energy Information Administration (EIA), crude inventories showed a 2.6 million barrel draw.
Specifically, traders were said to be motivated by falling production in Venezuela, whose output has been halved since 2005 to below 2 million barrels per day (bpd) - a situation that caused the International Energy Agency to declare the Bolivian republic "vulnerable to an accelerated decline" and having the potential to tip global markets into deficit.More news: SNOW: Somerset schools re-open as weather improves
Stimulated by yesterday's surprise crude stockpiles decline estimated by API, at 2.74 million barrels, WTI today traded at US$64.24 at the time of writing, with Brent crude at US$67.97 a barrel.
US West Texas Intermediate (WTI) crude futures were at $62.61 a barrel at 0744 GMT, up 55 cents, or 0.9 percent, from their previous close.
The EIA is out with the government's inventories report this morning at 10:30 am ET.More news: No ransom paid for 101 Dapchi girls released, Presidency says
Trump has threatened to withdraw the United States from the accord between Tehran and six world powers, raising the prospect of new sanctions that could hurt Iran's oil industry. Donald Trump hinted at a withdrawal from a deal curbing Iran's nuclear program as a US visit by Saudi Arabia's Mohammed Bin Salman began.
The U.S.' increasing arms sales to Saudi Arabia also raises concerns that tensions between the Kingdom and Iran could threaten the security of oil supplies from the region. Earlier this week, Senator Bob Corker said that Trump will not extend sanctions waivers on Iran in May. The production rise has capped oil price gains. A widening discount of WTI to Brent crude makes it more attractive for foreign refiners to process USA oil. This is likely to cripple Iran's ability to export crude oil, lowering global supply of the commodity. The current upside momentum suggests we could see a near-term test of the February 2 top at $65.63 and the January 25 top at $66.02. The April contract expired Tuesday after adding 2.2 percent to $63.40, the highest close for front-month futures since February 26.More news: WWE's Daniel Bryan Returns, Promptly Gets Powerbombed
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