Crude oil prices gained despite bearish data showing U.S. oil inventories at a 20-month high, with Middle East tensions continuing to rise as Saudi Arabia said armed drones struck a critical oil pipeline, two days after the sabotage of oil tankers near the United Arab Emirates.
WTI futures settled +0.4% at $62.02/bbl, and Brent closed +0.7% at a two-week high $71.77/bbl.
"The damaged pipeline in question is a key link in mitigating some of Saudi’s high reliance on the Hormuz Strait to export crude, an issue that has been in heavy focus following recent threats from Iran," says Robbie Fraser, senior commodity analyst at Schneider Electric, but analysts also noted the reported attacks and rising rhetoric have not yet caused any actual supply problems.
Investors also were willing to overlook the bearish U.S. inventory report given the higher-demand summer season is right around the corner; “Oil futures are shrugging off the big build in inventories in anticipation that refinery utilization will pick up into the driving season and burn off excess supplies,” says RJO Futures senior market strategist Phillip Streible.
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