Futures Movers: Oil prices jump amid fresh Iran tensions, falling U.S. supply, stock-market gains

Oil prices surged Thursday, rising in step with other perceived riskier assets following hints that the Federal Reserve could cut interest rates in the coming months and on news that Iran shot down a U.S. military drone.

Data Wednesday that showed falling U.S. supplies and a firmer date in place for an Organization of the Petroleum Exporting Countries meeting to review its pledged production limits were also price-supportive.

U.S. benchmark West Texas Intermediate crude for August delivery CLQ19, +3.34% rose $1.53, or nearly 2.8%, to $55.50 a barrel, while the July contract CLN19, +3.24%  rose $1.52, or 2.8%, to $55.28 a barrel.

“A decisive pull higher today has now broken above the resistance at $54.85,” said Richard Perry, analyst at Hantec Markets. “This bodes well for the near term outlook. Happy to now support the market, a close above $54.85 would… imply a recovery towards $59.10 in due course.”

International benchmark August Brent crude BRNQ19, +2.67%  climbed $1.38, or 2.2%, to $63.20 a barrel on ICE Futures Europe.

Amid already rising tensions between Iran and the U.S., Iran’s Revolutionary Guard said Thursday it shot down a U.S. drone. The U.S. has blamed Iran for attacks on ships near the Gulf of Oman recently, a charge the country denies.

The attacks come against the backdrop of heightened tensions between the U.S. and Iran following President Donald Trump’s decision to withdraw from Tehran’s nuclear deal with world powers a year ago. The White House separately said it was aware of reports of a missile strike on Saudi Arabia amid a campaign targeting the kingdom by Yemen’s Iranian-allied Houthi rebels.

“Iran is showing they are still able to rattle oil markets and the downing of a U.S. drone is the latest escalation,” said Edward Moya, senior market analyst at Oanda. “Oil prices are out of bear market territory and appear well supported here.”

Global stock markets climbed despite the geopolitical ripples, with U.S. stock futures pointing to a stronger session on the heels of gains in Asia and Europe. The U.S. Federal Open Market Committee kept interest rates steady as expected Wednesday, but took away its language pledging “patience” around change, which markets took as a hint the bank was ready to ease borrowing costs if that move is warranted.

Meanwhile, the Energy Information Administration reported Wednesday that U.S. crude supplies fell by 3.1 million barrels for the week ended June 14. after two straight weeks of gains. That was more than the 2-million-barrel drop expected from analysts polled by S&P Global Platts.

Also helping the bulls out was news that OPEC and its allies, informally referred to as OPEC-plus, will hold meetings on July 1-2. The session was originally scheduled for June 25-26. The date resolution ended weeks of speculation around a moving target for when to hold the meeting, as Russia’s position on continued production restraint remains unclear.

“OPEC and allies were finally able to settle on a date to meet and the three biggest producers (Saudi Arabia, Iraq and UAE) are set on extending production cuts for the rest of the year,” said Moya.

Among the other energy contracts, July gasoline RBN19, +2.05%  rose 2% to $1.770 a gallon. July heating oil HON19, +2.55%  rose 1.9% to $1.864 a gallon. July natural gas NGN19, -0.18%  lost inched up 0.4% to $2.285 per million British thermal units.

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