Oil Prices Jumped 5 Percent On Tensions In Iran And A Possible Interest Rate Cut By The Federal Reserve
Oil prices surged more than 5 per cent on Thursday amid fears of a military confrontation between Tehran and Washington after Iran shot down a us military drone.
Expectations that the U.S. federal reserve may cut interest rates at its next meeting to spur growth in the world's largest oil consumer and a drop in U.S. crude inventories also supported prices.
"There is a confluence of events that are affecting the oil market," said John Kilduff, partner at Again Capital Management in New York.
Global benchmark brent crude futures rose $2.63, or 4.3 percent, to settle at $64.45 a barrel. U.S. crude oil futures closed up $2.89, or 5.4 percent, at $56.65 a barrel.
Brent's premium over U.S. crude has narrowed to its lowest level since April. Bob Yawger, mizuho futures director, said U.S. crude futures were rising faster than brent because of the fed's potential policy effects.
U. S. President Donald trump has played down the shooting down of an American military drone by Iran, saying he suspects the drone was mistakenly shot and that "it would have been a very different story" for him if the remote-controlled aircraft had been manned.
Gulf OPEC producers are set to keep their output within OPEC's target for July, despite the expiry of current global output cuts at the end of June, a source with the organization of petroleum exporting countries said, indicating gulf exporters are reluctant to increase supplies.
OPEC and its Allies, including Russia, appear to be extending an agreement to cut production by 1.2 million barrels a day. The group, known as OPEC+, agreed this week to meet on July 1-2, ending a month of wrangling over the timing.
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