(Bloomberg) -- Oil pushed higher as an industry report suggested U.S. crude stockpiles continue to shrink, a bullish signal for a market that’s been beset by economic jitters and an uncertain standoff in the Middle East.
Futures jumped almost 1% in New York within minutes of an American Petroleum Institute report said to show U.S. inventories dropping by 7.55 million barrels, more than twice the median drop predicted by analysts in a Bloomberg survey. If confirmed by government data on Wednesday, it would be the second straight stockpile drop and the biggest in three months.
Prices had flipped between gains and losses several times during a choppy trading session that also brought reminders of the fragile economic outlook.
Acting Secretary of Defense Mark Esper said the U.S. isn’t looking to go to war with Iran, Federal Reserve Chairman Jerome Powell warned the risks to the economy have increased and Trump administration officials signaled a trade deal at the Group of 20 summit this week is unlikely.
“Oil squeezed higher last week on tensions in the Middle East, but with so much uncertainty regarding the trade war and global economy, the demand argument is too shaky for a sustainable rally just yet,” Tyler Richey, co-editor at Sevens Report Research in Palm Beach Gardens, Florida, wrote in a note to clients.
West Texas Intermediate for August delivery rose 1.2%, or 72 cents, to $58.62 at 4:45 p.m. on the New York Mercantile Exchange, after closing the official trading session at $57.83. Brent for August settlement rose 92 cents, or 1.4%, to $65.78 a barrel on London’s ICE (NYSE:ICE) Futures Europe Exchange.
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“The United States is not looking to go to war with Iran; rather we want to get into a diplomatic path,” Esper told reporters en route to Brussels Tuesday for a North Atlantic Treaty Organization conference. The administration wants to work with its allies to bring Iran “back to the negotiating table,” he said.
