Oil rallied on speculation the U.S. President’s appointment of a famed hawk as his new security adviser could increase geopolitical tensions, drawing investors’ focus away from the growing fears of a trade war.
Futures climbed as much as 1.7 percent in New York, heading for the biggest weekly advance since January. President Donald Trump said he will replace White House National Security Adviser H.R. McMaster with hardliner John Bolton ahead of a key decision on whether to maintain the Iran nuclear deal. Abandoning the accord raises the prospect of sanctions against the OPEC-member’s oil sales, analysts have said. Prices slumped 1.3 percent on Thursday after Trump called for tariffs on at least $50 billion in Chinese imports.
Crude prices have been struggling to recover to their recent peaks in January as fears of a trade war, surging U.S. shale production and a global equity rout weighed on the market. Still, last week’s surprise draw in American crude inventory has boosted optimism the Organization of Petroleum Exporting Countries and its allies’ production cuts are bearing fruit, helping to buoy oil prices toward their third weekly gain.
“Trump has dismissed those that wanted to protect the Iran nuclear agreement, and has replaced them with people who are opposed to Iran,” Takayuki Nogami, chief economist at state-backed Japan Oil, Gas & Metals National Corp., said by phone from Tokyo. “Concern Trump will scrap the nuclear agreement is getting bigger and bigger. This is supporting crude prices.”
West Texas Intermediate crude for May delivery rose as much as $1.12 to $65.42 a barrel on the New York Mercantile Exchange and traded at $65.03 at 1:22 p.m. in Tokyo. Prices were 4.3 percent higher on the week, the most since January. The contract fell 87 cents to $64.30 on Thursday.
Source: Bloomberg
