Oil prices soared on Wednesday as traders cheered a massive drop in U.S. supply while tensions with Iran heightened after President Donald Trump imposed new sanctions on the country this week.
U.S. West Texas Intermediate crude futures rose 3.3%, hitting a fresh monthly high of $59.76 U.S. a barrel. ?Brent crude futures were up 2.4% at $66.69 per barrel. They earlier touched their highest since May 31 at $66.25 a barrel.
The Energy Information Administration (EIA) said Wednesday that U.S. crude inventories fell by 12.8 million barrels last week.
Trump signed an executive order Monday imposing new sanctions on Iran in response to the downing of an unmanned U.S. drone last week. On Wednesday, he told media outlets he was hoping to avoid war with Iran but if one broke out, it “would not last very long.”
In addition to rising tensions with Iran, last week the East Coast’s largest gasoline refinery, Philadelphia Energy Solutions, had a series of explosions that shut down operations.
One official said he does not know if Philadelphia Energy Solutions’ refinery is closing for good but if it does, the loss of supply will be made up from elsewhere, including from the Gulf Coast, Europe and Canada, as the entire world is well supplied.
Valero Energy’s (NYSE:VLO) stock rose more than 2% on Wednesday. PBF (NYSE: PBF) rose more than 5% and Phillips 66 (NYSE: PSX) rose more than 2%.
