Oil Rises as Iran Nuclear Talks Overshadow U.S. Inventory Data

(Bloomberg) -- Crude closed higher as investors remained laser-focused for any signals from French President Emmanuel Macron on an Iran nuclear deal, overshadowing a bearish U.S. inventory report.

Futures in New York settled 0.5 percent higher on Wednesday after fluctuating during the session. Early on, data from the Energy Information Administration initially took traders by surprise, showing a larger-than-expected build in U.S. crude stockpiles. By the end of the session, investors refocused on Macron’s speech and the lingering issues around an Iran nuclear deal.

“The overarching thing going on here is Iran and the countdown to May 12,” the deadline for a U.S. decision on renewing Iran’s sanctions, said Rob Thummel, managing director at Tortoise, which handles $16 billion in energy assets. "That’s what everyone’s looking for guidance on and trading on.”

Investors are eyeing remarks from Macron, who is pushing the limits of international diplomacy, as his last-ditch appeal to salvage the Iran nuclear deal wrong-footed European allies and was met with intransigence by U.S. President Donald Trump.

Earlier in the session, crude fell briefly after the EIA data showed a U.S. crude stockpile build of 2.17 million barrels last week, larger than the 1.1-million-barrel boost reported by the American Petroleum Institute. The increase was “driven by refinery utilization dropping a couple percentage points, and also the fact that imports surprisingly were very strong,” said Joseph Bozoyan, a portfolio manager at Manulife Asset Management LLC in Boston.

West Texas Intermediate crude for June delivery added 35 cents to settle at $68.05 a barrel on the New York Mercantile Exchange. Total volume traded was about 6 percent above the 100-day average.

Brent crude for June delivery rose 14 cents to end the session at $74 a barrel on the London-based ICE Futures Europe exchange. The global benchmark crude traded at a $5.95 premium to June WTI.

“Crude oil exports jumped a lot. That’s pretty substantial,” Thummel said. “With where the spread is between WTI and Brent, it encourages more exports.”

The EIA report showed U.S. crude supplies rose to 429.7 million barrels last week, as refinery utilization ticked lower. At the same time, crude exports jumped for a second week to the highest level on record.

Gasoline supplies rose 840,000 barrels, the biggest build since late February. Oil stored at Cushing, Oklahoma, rose by 459,000 barrels last week, and crude production hit a fresh record-high.

Other oil-market news:

  • Gasoline futures declined 0.3 percent to settle at $2.0897 a gallon on Wednesday.
  • Chevron Corp. says its continuing its operations in Venezuela following reports that senior personnel had been evacuated after two employees were arrested by authorities last week.
  • Mexico’s state oil company plans to hedge part of its production on a regular basis after it was stung by the collapse in crude prices.

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