Oil fell after the close, wiping out a day of gains after US President Donald Trump said he had been assured that Iran would stop killing protesters, signaling he could hold off on a threatened military response to the repression of widespread demonstrations in the nation.
West Texas Intermediate was down as much as 3% after settlement on Wednesday, dropping to around $59 a barrel in a rapid reversal before paring some of those losses. Prices had settled on Wednesday at $62.02. Oil had gained in each of the last five sessions as traders awaited the US response to political upheaval in Iran, with the US moving military staff and Tehran warning neighboring countries against assisting an attack.
Concerns about a disruption to Iran’s approximately 3.3 million barrel-per-day production and key shipping lanes had helped push prices to their highest since October.
But prices fell sharply after US President Donald Trump told reporters in the Oval Office Wednesday, “we’ve been told that the killing in Iran is stopping – it’s stopped.” The comments lessened expectations of an immediate US military response to the demonstrations against the government of Supreme Leader Ayatollah Ali Khamenei. Trump said he would be “very upset” if the information proved untrue and the violent crackdown continued.
Oil has pushed higher in the new year as turmoil in OPEC’s fourth-largest producer, along with upheaval in Venezuela, restored a premium to prices following a run of five monthly losses spurred by expectations for a glut.
The bumper rally in crude over recent days had caught off guard a market that had been steeped with bearish bets, while further boosts came from bullish options wagers, where volumes soared to a record this week, and an annual commodity index rebalancing that added inflows to crude markets.
On the physical front, a government report showed that US crude stockpiles rose 3.4 million barrels last week, the biggest increase in two months but smaller than forecast by a closely followed industry report. The market’s ambivalence indicates that investor focus is decisively pointed at the drama unfolding in Iran. Refined product stockpiles also increased.
Oil Prices
WTI for February delivery fell 1.6% to $60.16 a barrel at 3:53 p.m. in New York after previously settling at $62.02.
Brent for March settlement fell 1.5% to $64.48 a barrel after previously settling at $66.52.
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