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Oil Jumps as API Sees Surprise Plunge in U.S. Crude Stockpiles

Investors switched their focus to this week’s G-20 summit and the prospect of extended production cuts from OPEC and its allies.

Oil Jumps as API Sees Surprise Plunge in U.S. Crude Stockpiles
Demonstrators march during a protest against the Group of 20 (G-20) Summit in Osaka, Japan. (Photographer: Buddhika Weerasinghe/Bloomberg)

(Bloomberg) -- Oil pushed higher as an industry report suggested U.S. crude stockpiles continue to shrink, a bullish signal for a market that’s been beset by economic jitters and an uncertain standoff in the Middle East.

Futures jumped almost 1% in New York within minutes of an American Petroleum Institute report said to show U.S. inventories dropping by 7.55 million barrels, more than twice the median drop predicted by analysts in a Bloomberg survey. If confirmed by government data on Wednesday, it would be the second straight stockpile drop and the biggest in three months.

Prices had flipped between gains and losses several times during a choppy trading session that also brought reminders of the fragile economic outlook.

Oil Jumps as API Sees Surprise Plunge in U.S. Crude Stockpiles

Acting Secretary of Defense Mark Esper said the U.S. isn’t looking to go to war with Iran, Federal Reserve Chairman Jerome Powell warned the risks to the economy have increased and Trump administration officials signaled a trade deal at the Group of 20 summit this week is unlikely.

“Oil squeezed higher last week on tensions in the Middle East, but with so much uncertainty regarding the trade war and global economy, the demand argument is too shaky for a sustainable rally just yet,” Tyler Richey, co-editor at Sevens Report Research in Palm Beach Gardens, Florida, wrote in a note to clients.

West Texas Intermediate for August delivery rose 1.2%, or 72 cents, to $58.62 at 4:45 p.m. on the New York Mercantile Exchange, after closing the official trading session at $57.83. Brent for August settlement rose 92 cents, or 1.4%, to $65.78 a barrel on London’s ICE Futures Europe Exchange.

“The United States is not looking to go to war with Iran; rather we want to get into a diplomatic path,” Esper told reporters en route to Brussels Tuesday for a North Atlantic Treaty Organization conference. The administration wants to work with its allies to bring Iran “back to the negotiating table,” he said.

Other oil-market news:
  • Gasoline futures rose 1.2% to $1.8772 a gallon.
  • Russian President Vladimir Putin plans to meet Saudi Crown Prince Mohammed Bin Salman at the G-20 summit in Japan this week, just days before the OPEC+ gathering in Austria to discuss oil-output cuts.

--With assistance from Tsuyoshi Inajima.

To contact the reporters on this story: Alex Nussbaum in New York at anussbaum1@bloomberg.net;Grant Smith in London at gsmith52@bloomberg.net

To contact the editors responsible for this story: James Herron at jherron9@bloomberg.net, Reg Gale, Catherine Traywick

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