(Jan 14): Oil erased an earlier drop, as traders weighed the US response to unrest in Iran, with reports that some personnel have been advised to leave a US air base in Qatar.
Brent traded above US$65 a barrel, after adding more than 9% over the previous four sessions. Reuters reported that some staff had been told to leave the Al Udeid Air Base in Qatar by Wednesday evening. The air base was targeted by Iran in retaliatory airstrikes last year.
US President Donald Trump urged Iranians to continue protests against the government of Supreme Leader Ayatollah Ali Khamenei, and said he would “act accordingly” once he gets a sense for how many of the demonstrators have been killed.
Trump suggested his next move would hinge on a meeting of the National Security Council. The body met on Tuesday without Trump to prepare options for the president, the Washington Post reported, citing a person familiar with the meeting.
Traders are watching the unrest in Iran and possible American intervention, which could threaten the country’s roughly 3.3 million barrels-a-day crude output, as well as further amounts of gassy liquids. Energy Secretary Chris Wright told Fox News that the US would “happily be a commercial partner” for Iranian crude if the regime fell.
Oil has pushed higher in the new year as the turmoil in Opec’s fourth-largest producer, along with upheaval in Venezuela, restored a premium into prices following a run of five monthly losses spurred by expectations for a glut. The rally has caught off guard a market that had been steeped with bearish bets, and further boosts have come from bullish options wagers and an annual commodity index rebalancing.
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“Net speculative positioning was very short going into year-end and coupled with index rebalancing and geopolitical news, this was a recipe for a spike higher,” said Keshav Lohiya, founder of consultant HiLo Analytics. “The big question is, like recent history, will this geopolitical spike be eventually faded.”
On the physical front, an industry report indicated that US crude stockpiles rose 5.3 million barrels last week. That would be the biggest increase in two months if confirmed by official data later on Wednesday. In addition, the snapshot from the American Petroleum Institute showed builds in gasoline and distillates.
Prices:
- Brent for March settlement added 0.4% to US$65.68 a barrel at 10.17am in London.
- WTI for February delivery gained to US$61.34 a barrel.
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