Oil prices up on lower US stock and US refinery fire

London — Oil prices rose on Wednesday, buoyed by an outage at a major refinery on the US East Coast and industry data that showed US crude stockpiles fell more than expected.

Front-month Brent crude futures, the international benchmark, were up 84c at $65.89 a barrel by 9.48am GMT. They earlier touched their highest since May 31 at $66.25 a barrel. US West Texas Intermediate (WTI) crude futures were at $58.91 a barrel, up $1.08 from their last settlement. WTI earlier hit its highest level since May 30 at $59.13 a barrel.

Philadelphia Energy Solutions is expected to seek to permanently shut its oil refinery in the city after a massive fire caused substantial damage to the complex, two sources familiar with the plans said on Tuesday.

The plant, located in the busiest and most densely populated part of the US East Coast, had already declared force majeure on some petrol supplies following the fire. US petrol futures hit their highest level since end-May on Wednesday.

“Oil is up in reaction to the American Petroleum Institute (API) data combined with the refinery disruption on the US East Coast. Petrol is up and leading the complex and helping keep momentum up on crude,” Olivier Jakob of PetroMatrix consultancy in Switzerland said.

“Refinery margins are improving globally because if that refinery can’t operate then you’ll have to compensate with higher runs elsewhere.”

US crude stockpiles fell by 7.5-million barrels in the week ended June 21 to 474.5-million, compared with analyst expectations for a decline of 2.5-million barrels, API data showed. Crude stocks at US delivery hub Cushing, Oklahoma, fell by 1.3-million barrels.

The crude inventory fall and refinery outage added to uncertainty over oil supplies created by the war of words between Washington and Tehran. This has prompted fears that oil shipments through the Strait of Hormuz — the world’s busiest oil supply route — could be disrupted.

On Tuesday, US President Donald Trump threatened to obliterate parts of Iran if it attacked “anything American”. Tehran has condemned a fresh round of US sanctions as “mentally retarded”.