Oil Futures Rebound on Bullish US Inventory Data

Oil Futures Rebound on Bullish US Inventory Data

The indexes had been drifting slightly lower as investors weighed the Trump administration's decision to withdraw from a 2015 nuclear deal with Iran and reinstate sanctions on the country.

Brent crude oil touched its highest since November 2014 on Wednesday, up $2.19 a barrel, or 2.9% at $77.04 USA late in the morning session.

Health care, utilities and consumer-goods companies were among the biggest decliners.

The energy sector in equity markets rallied, helping lift European stocks, a gauge of world equity performance and the broad USA market.

But analysts say Wednesday's advances could be just kneejerk reactions as the market needs more time to fully digest the impact of the US's unilateral crackdown on Iran. "We never welcome sanctions, but even if new sanctions grip the petroleum industry we will strongly and firmly continue our development activities, as we have already done", the PEDEC chief said. "Now we have to see what the reactions are".

The S&P 500 index dipped 0.71 points, or 0.03 percent, to 2,671.92.

The Dow Jones Industrial Average .DJI rose 182.33 points, or 0.75 percent, to 24,542.54.

Smaller companies fared better than the rest of the market. Energy stocks also fell as oil prices declined ahead of an afternoon announcement by the White House on whether the USA will pull out of a landmark nuclear deal with Iran.

The Italy/Germany 10-year government bond yield spread widened five basis points immediately after news that 5-Star and the League had said they were holding last-minute talks to try to clinch a coalition deal. The 2015 agreement required Iran to curb its nuclear enrichment program in exchange for relief from worldwide sanctions.

After Trump's remarks, oil prices pared some of their earlier losses.

In the US, the Energy Information Administration reported nationwide crude inventories slid 2.2 million barrels last week, in contrast to a forecast for a 1 million-barrel gain in a Bloomberg survey.

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During the last round of sanctions, Iran's oil supplies fell by around 1 million barrels per day (bpd), but the country re-emerged as a major oil exporter after sanctions were lifted in January 2016.

As the table below shows, Brent crude oil prices have tracked BlackRock's gulf-focused Geopolitical Risk Indicator.

Energy stocks mostly reversed an early tumble.

Several companies, including Airbus, Boeing and Total, that have struck business deals in Iran and could be looking for exemptions from USA sanctions, finished slightly lower. Boeing was down 1 percent to $337.06, while Total dipped 0.2 percent to $61.86.

Corporate deal news also helped move the market Tuesday. Shares in Takeda slipped 0.2 percent to $20.96. Shares in Fox slipped 0.1 percent to $37.99. Shares in Cohu slid 4.8 percent to $22.24.

Futures for September delivery on the Shanghai International Energy Exchange rose 2.1 percent to 475.1 yuan a barrel, climbing for a fourth day. The rise in yields pushed up interest rates, which allows banks to make more money from loans. Financial and industrial stocks followed, rising 0.7%.

MSCI's gauge of equity performance in 47 countries.MIWD00000PUS rose 0.61 percent.

CURRENCIES: The dollar strengthened to 109.91 yen from 109.65 on Wednesday. The euro fell to $1.1881 from $1.1923.

Gold dipped 40 cents to $1,313.70 an ounce. Copper lost 2 cents to $3.06 a pound. Germany's DAX edged up 0.6 percent to 13,019.58. Britain's FTSE 100 was flat.

Petrochemical market sources in Asia were largely calm after the announcement, but were also wary of the resulting heightened uncertainty.

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