WTI price gains momentum to near $73.55 in Wednesday’s early Asian session.
Trump threatens Iran’s leader, calling for unconditional surrender.
US crude oil inventories fell sharply by 10.133 million barrels in the week ended June 13, according to the API.
West Texas Intermediate (WTI), the US crude oil benchmark, is trading around $73.55 during the Asian trading hours on Wednesday. The WTI price extends the rally as the Middle East tensions escalate and the likelihood of the United States (US) involving the conflict increases.
US President Donald Trump posted on his social media platform, calling for Iran’s “unconditional surrender.” The fears that the US will be involved in the conflict amid escalating tensions between Israel and Iran lift the WTI price. Additionally, a senior commander stated on Saturday that Iran, a major producer of oil, is considering shutting down the Strait of Hormuz. This, in turn, could drive up prices for crude oil in the near term.
The American Petroleum Institute (API) weekly report showed crude oil stockpiles in the US for the week ending June 13 fell sharply by 10.133 million barrels, compared to a decline of 370,000 barrels in the previous week. The market consensus estimated that stocks would decrease by 600,000 barrels. So far this year, crude oil inventories are up 7.6 million barrels, according to oil price calculations of API data.
On the other hand, expectations of lower demand might cap the upside for the WTI. In its monthly oil report on Tuesday, the International Energy Agency (EIA) revised its world oil demand estimate downwards by 20,000 barrels per day from last month's forecast and increased the supply estimate by 200,000 bpd to 1.8 million bpd.
Oil traders will keep an eye on the US Federal Reserve (Fed) interest rate decision later on Wednesday, which is expected to keep interest rates steady at its June meeting. Futures markets expect two rate cuts by year-end, possibly beginning in September. Also, the EIA Crude Oil stockpiles report will be published.
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