Bloomberg) — Oil surged on prospects of a supply crunch after the U.S. ruled out the release of emergency crude reserves, adding to concerns over potential losses in Iranian supplies.
Futures in New York climbed as much as 1.4 percent. Prices on Wednesday pared declines after U.S. Energy Secretary Rick Perry said releasing oil from the nation’s Strategic Petroleum Reserve to prevent a price spike would have “a fairly minor and short-term impact.” That helped the market shrug off a surprise gain in American crude inventories, which rose for the first time in six weeks.
The U.S. benchmark is nearing four-year highs after the Organization of Petroleum Exporting Countries signaled they are in no rush to boost output to counter output losses in Iran and elsewhere, drawing repeated criticism from President Donald Trump. The outlook for tightening supplies prompted top trading houses to predict the return of higher oil prices last seen in 2014, and banks including Bank of America Corp. and JPMorgan Chase & Co. lifted their forecasts.
“The U.S. using the strategic reserves as an emergency-response tool to control oil prices was a bit of a stretch, given the history of how it was released in the past for war or hurricanes,” said Stephen Innes, Singapore-based head of trading for Asia Pacific at Oanda Corp. “While the U.S. oil inventory data counts, the fact that the markets could still be underestimating the supply crunch from Iran sanctions has many oil investors running with the bulls.”