Investing.com - Oil clambered back to near four-year highs on Thursday after Energy Secretary Rick Perry denied reports that the U.S. government plans to use emergency oil reserves to make up for barrels that would be lost from sanctions applied by Washington on Iranian oil exports.
Just a day ago, crude oil futures fell from peaks matching November 2014 highs after data showing a surprise weekly build in U.S. stockpiles.
London traded Brent crude futures, the global benchmark for oil, were up 0.73% at $81.38 a barrel by 3:17 PM ET (19:15 GMT). It had earlier reached $81.89, recovering some of the ground lost from highs of $82.55 reached on Monday.
Crude oil WTI futures added 0.91% to trade at $72.22, after a session high at $72.56.
Perry told a news conference at the Department of Energy late on Wednesday that the Trump Administration was not considering a release of oil from the U.S. Strategic Petroleum Reserve to offset the impact of the sanctions on Iran that would come into force from Nov. 4.
Headlines over the past three months have repeatedly raised the possibility of President Donald Trump tapping the SPR to lower current market and pump prices for gasoline and the president has not publicly refuted the reports. High oil prices are a political risk for Triump and his fellow Republicans.
“Perry is right. A release from the SPR will give the market a false sense of security and the demand side of the equation would be slow to adjust to less barrels,” said Phil Flynn, analyst at the Price Futures Group in Chicago.
The impending loss of supply from Iran has set the crude market on its biggest rally since the global oil glut that surfaced in 2014 due to rampant supply of U.S. shale crude. The Organization of the Petroleum Exporting Countries (OPEC) and non-OPEC members, including Russia, say they have little spare capacity to boost output in order to offset low supplies that will be brought on by the Iranian sanctions. Iran is OPEC’s third-largest producer.
Trump on Tuesday blasted OPEC and its refusal to step up oil production, telling the United Nations that OPEC members were “as usual ripping off the rest of the world.”
In its weekly report on Wednesday the Energy Information Administration said U.S. crude production hit a record 11.1 million barrels per day last week. Crude oil inventories recorded a build of 1.85 million barrels to 395.99 million barrels last week, the EIA data showed, compared to expectations for a drawdown of 1.27 million barrels.
In other energy trading, gasoline futures rose 0.74% to $2.0697 per gallon, while heating oil rose 0.94% to $2.3254 a gallon.