Oil Prices, Stocks Jump As U.S. Output Stays Flat, Inventories Plunge

Oil prices surged higher Wednesday as U.S. crude output remained unchanged for another week, while stockpiles plummeted.

and output data Wednesday as supply disruptions and looming Iran sanctions offset OPEC’s promise to increase production in July.


Oil production was flat at 10.9 million barrels per day last week, according to the Energy Information Administration. Oil stockpiles fell by 9.9 million barrels while gasoline supplies were up by 1.2 million barrels.

Analysts polled by S&P Global forecast a 2.3 million-barrel decline in crude stockpiles while analysts polled by Reuters expect a 2.6 million-barrel drop.

The American Petroleum Institute reported late Tuesday a 9.2 million-barrel drop in crude supplies. The industry group said gasoline stockpiles rose by 1.2 million barrels.

Oil prices continued to strengthen. Brent climbed 1.9% to $77.79 per barrel. U.S. crude rose 2.5% to $72.26, after jumping Tuesday.

Exxon Mobil (XOM) shares rose 2% on the stock market today. Chevron (CVX) rallied 2.5%, BP (BP) added 2.5%, and Royal Dutch Shell (RDSA) rose 1.9%.

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Oil prices were already enjoying a tailwind from worries over supply constraints.

The Trump administration warned allies that they needed to stop importing Iranian crude by November, a State Department official told Reuters Tuesday.

“Almost no one will stand by Iran despite the EU’s hope that they could keep the Iranian nuclear deal intact,” Phil Flynn, senior market analyst at Price Futures Group, wrote in his daily energy market report. “Oil companies and many countries will not want to face the possibility of U.S. wrath.”

The pressure on Iran comes as OPEC agreed Friday to boost oil production next month. That came after OPEC and its partners overshot an earlier agreement to reduce production by 1.8 million barrels per day. Analysts estimate that the reduction is about 2.8 million bpd as output from Venezuela and Iraq fell sharper than forecast.

Meanwhile, supplies will remain tighter in North America through next month. The shutdown of a key oil-sand facility in Canada will keep 350,000 barrels per day offline until at least August.


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