Futures Movers: Oil futures resume climb, flirting with fresh multimonth highs

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Oil futures gained Thursday, mounting a charge toward fresh multimonth highs, as energy-market participants considered the likelihood that major producers will answer with increased supply in response to tougher U.S. action against Iran’s oil market.

“While it was reported that the U.S., Saudi Arabia and United Arab Emirates will fill the void left by any shortfall [from Iran], there are serious doubts about how and when this would be achieved. And when you consider the fact that two of the three are currently actively trying to curb output in order to rebalance the market and lift prices, you have to question the motivation to then step in and turn on the taps,” said Craig Erlam, senior market analyst at Oanda.

U.S. futures on Wednesday had pulled back from their highest levels since October, with a hefty gain in weekly U.S. crude stockpiles prompting the first loss in four sessions. Brent oil futures managed to finish a few cents higher in that session. The Energy Information Administration on Wednesday reported that U.S. crude supplies rose by 5.5 million barrels for the week ended April 19. Analysts polled by S&P Global Platts expected a decline.

In recent action, U.S.-based West Texas Intermediate crude for June delivery CLM9, +0.33% was up 36 cents, or 0.6%, to $66.23 a barrel on the New York Mercantile Exchange. WTI on Tuesday scratched $66.30, the highest settlement for a front-month contract since Oct. 29, FactSet data show.

June Brent crude LCOM9, +0.87% the global benchmark, tacked on 95 cents, or 1.3%, at $75.49 a barrel on ICE Futures Europe. Its finish at $74.57 Wednesday was its highest since late October.

Read: Here’s what $100-a-barrel oil would do to the global economy

Crude’s multiday rise had come on the heels the U.S. decision to end waivers for countries importing Iranian oil, as part of a bid by the Trump administration to push Iran’s exports to zero. The current waivers expire on May 2. Chatter has included speculation that tighter sanctions against Iran and separately, Venezuela, could trigger an end to the production-cut agreement among members and select nonmembers of Organization of the Petroleum Exporting Countries. That deal, in which OPEC and its allies agreed to cut production by 1.2 million barrels a day, expires in June.

The Trump administration has said that other OPEC members such as Saudi Arabia and U.A.E. will ensure adequate oil supplies. Saudi Arabia’s energy minister Khalid al-Falih said Wednesday “we remain focused on balancing global oil markets,” according to an OPEC tweet.

Read: The end of Iranian oil waivers and what it means for the OPEC-led output cut pact

“What’s interesting is that momentum doesn’t appear to be lacking from the latest moves which suggests prices could continue to rise,” said Erlam. “Brent could face an interesting test around the $76-78 range, with WTI facing similar challenges around $67-69. Should these levels give way, it could be a very bullish signal for oil and recent moves suggest there is potential for this.”

On Nymex, May gasoline RBK9, +1.05%  rose 1.1% to $2.1521 a gallon and May heating oil HOK9, +0.60%  rose 0.7% to $2.1148 a gallon. May natural gas NGK19, +0.45%  fetched $2.469 per million British thermal units, up 0.3%.

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