Oil Tanker Attacks Spark Price Rebound

Oil rebounded from near the lowest level in five months after two tankers were damaged in a suspected attack in the Gulf of Oman.

Futures in New York rose as much as 3.9% after the US Fifth Fleet said two tankers had been damaged. The tanker Kokuka Courageous sailing from Saudi Arabia to Singapore with a cargo of methanol “has been damaged as a result of the suspected attack,” the vessel manager said in a statement.

Oil slumped 4% on the 12^th June after US government data showed crude stockpiles expanded by 2.2 million barrels last week.

The incident in the Gulf of Oman follows attacks on oil tankers near the Persian Gulf last month and raises the possibility of a disruption of crude flows. That may give prices some reprieve after swelling American inventories and the rupture between the US and China wiped out most of this year’s rally.

WTI’s 14-day relative strength fell back into oversold territory on the 12^th June, a signal recent losses may have been overdone.

WTI futures for July delivery gained US$1.28, or 2.5%, to US$52.42 a barrel on the New York Mercantile Exchange as of 7:58 am in London. The contract closed down US$2.13 on the 12^th June, the biggest drop since the 31^st May.

Brent for August settlement added US$1.68, or 2.8%, to US$61.65 a barrel on London’s ICE Futures Europe Exchange after jumping as much as 4.5% earlier.

It closed down 3.7% on the 12^th June. The global benchmark crude traded at a premium of US$9.02 to WTI for the same month.

US crude stockpiles climbed to the highest level since July 2017 in the week through the 7^th June, according to the Energy Information Administration.

The EIA also said inventories at Cushing, the largest American storage hub, rose by 2.1 million barrels, the biggest increase since mid-February.

Total US oil inventories including the Strategic Petroleum Reserve have now risen in 10 of the last 12 weeks amid subdued demand for products.

Trade negotiations between Washington and Beijing broke down after the US accused China’s leaders of reneging on provisions of a tentative agreement. Mr Trump said the 11^th June that he would not complete an agreement unless China returns to terms negotiated earlier in the year.

A day earlier, he threatened to raise tariffs if President Xi Jinping does not meet with him at the Group of 20 summit this month in Japan.

Source: Rigzone