Oil jumps 3pc to $63 per barrel

LONDON: Oil jumped more than 3 per cent to above $63 a barrel on geo-political tensions in the Middle East.

Also supporting oil were expectations that the US Federal Reserve could cut interest rates at its next meeting, stimulating growth in the world’s largest oil-consuming country, and a drop in US crude inventories.

Brent crude, the global benchmark, was up $1.38 at $63.20 a barrel at 08:54 GMT, having risen 3.3 per cent to $63.88 earlier in the session. US West Texas Intermediate crude rose $1.45 to $55.21.

“It’s a combination of factors,” Petromatrix analyst Olivier Jakob said of the price rise. “You have more supportive stocks data, the Fed indicating they will cut rates.” Concern about slowing economic growth and a US-China trade dispute has pulled oil lower in recent weeks. Brent reached a 2019 high of $75 in April.

Also propelling oil higher on Thursday was a larger-than-expected decline in US crude inventories and the prospect of prolonged supply restraint by producer group Opec and its allies.

After swelling to near two-year highs, US crude stocks fell by 3.1 million barrels last week, compared with analyst expectations for a draw of 1.1 million barrels, the Energy Information Administration said on Wednesday.

The Organization of the Petroleum Exporting Countries and allies including Russia agreed this week to meet on July 1-2, ending a month of wrangling about the timing of the meeting.

The coalition known as Opec+ will discuss whether to extend throughout 2019 a deal on cutting 1.2 million barrels per day of production. The deal expires at the end of this month. — Reuters