Oil extends rally on supply concerns, easing US rhetoric
Oil prices rose more than 1% on Wednesday, building on gains from the previous session, as markets responded to a combination of geopolitical and economic signals.
A new round of U.S. sanctions on Iran, a larger-than-expected drop in U.S. crude inventories, and a softer stance from President Donald Trump on the Federal Reserve all contributed to the bullish sentiment, News.Az reports, citing Reuters.
Brent crude futures (BZ=F) climbed 95 cents, or 1.4%, to $68.39 a barrel at 0800 GMT, while U.S. West Texas Intermediate crude (CL=F) was up 97 cents, or 1.5%, at $64.64 a barrel.
The U.S. issued new sanctions targeting Iranian liquefied petroleum gas and crude oil shipping magnate Seyed Asadoollah Emamjomeh and his corporate network on Tuesday.
Emamjomeh's network is responsible for shipping hundreds of millions of dollars' worth of Iranian LPG and crude oil to foreign markets, the U.S. Treasury said in a statement.
Both benchmark prices this morning were also backed by hopes of a positive outcome between the U.S. and China over import tariffs, Sachdeva said.
Trump on Tuesday backed away from the threat of firing Fed Chair Jerome Powell after days of criticism for the Fed not cutting interest rates. Trump also signalled the possibility of lower tariffs on Chinese imports.
Meanwhile, U.S. crude oil inventories fell by around 4.6 million barrels last week, market sources said on Tuesday citing American Petroleum Institute data. [API/S]
U.S. government data on oil stockpiles is due at 10:30 a.m. ET (1430 GMT) on Wednesday. Analysts on average estimated an 800,000 barrel decline in U.S. crude oil stocks last week, a Reuters poll showed.
Trump told reporters on Tuesday he would be "nice" in negotiations with China and that tariffs would fall significantly following a deal, but not to zero.
U.S. Treasury Secretary Scott Bessent said he believed there would be a de-escalation in U.S.- China trade tension but that negotiations had not yet started and would be a "slog", a person who heard his closed-door presentation to investors at a JP Morgan conference told Reuters.
Trade tariffs have weighed on crude futures on investor concern about their potential to slow global economic growth.
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