Oil jumped alongside broader equity markets, with traders embracing risk assets and largely ignoring a bearish US inventories report.
West Texas Intermediate settled above $70 a barrel, jumping more than $2 on Thursday. Oil traders shrugged off data that showed U.S. crude stockpiles rose by more than 4 million barrels last week and inventories at Cushing, Oklahoma, the nation’s largest storage hub, rose for a sixth week.
Instead, oil rallied as stocks rose and the dollar fell on speculation that the Federal Reserve may hold off on interest rate hikes this month.
Crude oil prices have fallen about 13% this year amid concerns about aggressive monetary tightening in the US and China’s economic recovery. A private survey showed a slight expansion in Chinese manufacturing activity in May, a surprise improvement that contradicted official data released earlier this week.
Traders are anticipating an OPEC+ meeting at the weekend in Vienna to discuss the group’s production policy. The 23-nation OPEC+ alliance faces a divided oil market when it meets on June 4. Brent crude prices falling to $70 or below would create a 60% to 70% chance of an output cut by some members, Citi analysts including Ed Morse said. note
Asked whether the group will make additional cuts, Azerbaijan’s Energy Minister Parviz Shahbazov told reporters in Baku that he did not know.
Prices:
- WTI for July delivery rose $2.01 to settle at $70.10 a barrel in New York.
- Brent for August delivery rose $1.68 to $74.28 a barrel.
