Futures in New York jumped as much as 3 percent on Wednesday as President Donald Trump warned Russia that U.S. missiles soon may strike Syria and Saudi Arabia intercepted a missile attack on the kingdom’s capital. A U.S. government report on expanding domestic oil inventories barely fazed traders caught up in the rush of world events.
“People are paying attention to geopolitical risks,” said Matt Sallee, who helps manage $16 billion in oil-related assets at Tortoise in Leawood, Kansas. Traders “are more interested in the big picture.”
“Russia vows to shoot down any and all missiles fired at Syria. Get ready Russia, because they will be coming, nice and new and ‘smart!’,” Trump wrote on Twitter. Meanwhile, Saudi Arabia downed two Houthi drones, the Saudi Press Agency reported. A measure of oil market volatility jumped to levels last seen in mid-February.
West Texas Intermediate for May delivery surged $1.59 to $67.10 a barrel at 11:26 a.m. on the New York Mercantile Exchange. Total volume traded on Wednesday was about 87 percent above the 100-day average.
Brent for June settlement climbed $1.59 to $72.63 a barrel on the London-based ICE Futures Europe exchange.
Yemen Conflict
Loud explosions were heard in the night sky above Riyadh on Wednesday night as state-run television said Iranian-backed Houthi rebels targeted the capital from Yemen. Saudi Arabia last month said it intercepted seven ballistic missiles fired at Riyadh and other cities by the Houthis, the biggest such barrage since the kingdom went to war against them in March 2015.
In the U.S., Energy Information Administration data on Wednesday showed swelling surpluses at the biggest domestic storage complex as well as nationwide last week. American crude production also climbed, while exports of American oil declined to 1.21 million barrels a day.
“If you look through what drove the weekly build, it’s pretty much explained by the fact that exports were the second-lowest they’ve been all year,” Sallee said.
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