Oil prices reach 3 year high amid Middle East tensions

Oil prices reach 3 year high amid Middle East tensions

Oil prices reach 3 year high amid Middle East tensions

Later on Tuesday, oil prices dipped after the American Petroleum Institute (API) reported a surprise build of 1.758 million barrels of United States crude oil inventories for the week ending April 6, after analysts had anticipated a draw in crude oil inventories of 189,000 barrels.

And as long as geopolitical tensions - especially in the Middle East - continues to linger, it'll help to underpin oil prices further in the coming days.

Additionally, decreased demand from US Gulf Coast refineries amid spring turnaround season has left more volume available for the export market.

United States crude inventories rose by 1.8 million barrels in the week to April 6 to 429.1 million, according to a report by the American Petroleum Institute on Tuesday, compared with analysts' expectations for a decrease of 189,000 barrels.

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Oil climbed further as broadcaster Al Arabiya said Saudi Arabia's air defense forces intercepted a missile over the capital Riyadh.

The jump in oil prices underscores fears that the escalating conflict in Syria could pit the U.S. against Russian Federation and Iran - two of the world's major oil producers.

US data this week showed a surplus building in the domestic market, with crude oil inventory levels jumping more than 3 million barrels, contributing to the trend for crude oil prices early Thursday morning.

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Meanwhile, U.S. crude oil production last week hit a fresh record of 10.53 million barrels per day (bpd), up by a quarter since mid-2016.

"All eyes are on geopolitical tension at the moment, not just because the market is that much more finely balanced, but because there are several pockets of geopolitical tensions", he said.

Another damping factor was the U.S. Energy Information Administration's upward revision to its 2019 production forecast to 11.44 million barrels a day, from its previous figure of 11.27 million barrels.

U.S. WTI crude futures were at $67.20 a barrel, up 38 cents, or 0.4 percent from their last settlement.

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"We still think that the cartel is underestimating non-OPEC supply growth", said Capital Economics analysts, noting that higher prices will encourage USA producers to ramp up activity and OPEC members to exceed quotas.

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