Oil futures extended this week’s rally on Friday after U.S. prices scored their highest settlement this month a day earlier, alongside the biggest one-day gain so far this year, lifted by expectations for economy-boosting central bank policy and continued Middle East tensions that could disrupt oil markets.
Gasoline futures shot higher amid reports that a fire at a 150-year-old refinery complex in Philadelphia startled residents with explosions that shook homes Friday. Any permanent damage to the facility, the largest on the U.S. Eastern Seaboard, was as yet unclear.
Thursday’s gains came after Iran shot down a U.S. military drone, adding to fears of a deepening conflict and potential disruption to oil supplies. That news fueled an already price-bullish backdrop, created by expectations the Federal Reserve and other central banks will cut interest rates in coming months to sustain economic growth and boost energy demand.
Earlier Friday, the new front-month contract, August WTI crude
was up 35 cents, or 0.6%, to $57.42 a barrel.
On its expiration day, U.S. benchmark West Texas Intermediate crude for July delivery
rose $2.89, or 5.4%, to settle at $56.65 a barrel on the New York Mercantile Exchange. That was the largest one day dollar and percentage gain for a front-month contract since Dec. 26, 2018 and highest finish since May 29, according to Dow Jones Market Data.
shot up 3.6% to $1.85 a gallon, reacting to the refinery news.
The fire broke out at the Philadelphia Energy Solutions Refining Complex around 4 a.m., spokeswoman Cherice Corley said, according to the Associated Press.
By 7 a.m., the fire was contained but not under control, the reported said. Philadelphia Energy Solutions says the oil refining complex is the largest on the U.S. Eastern Seaboard, producing 335,000 barrels of crude oil daily. It was the second blaze at the refinery this month, following a June 10 fire in which no injuries were reported.
International benchmark August Brent crude
climbed 87 cents, or 1.4%, to $65.30 a barrel. It closed Thursday at $64.45 a barrel on ICE Futures Europe—the highest since May 31 and biggest one-day climb since Jan. 9.
Amid already rising tensions between Iran and the U.S., Iran’s Revolutionary Guard said Thursday it shot down a U.S. drone near the Strait of Hormuz. Tehran said the drone was in Iranian airspace, while the U.S. military said it was in international airspace. The U.S. has blamed Iran for attacks on ships near the Gulf of Oman recently, a charge the country denies.
The attacks come against the backdrop of heightened tensions between the U.S. and Iran following Trump’s decision to withdraw from Tehran’s nuclear deal with world powers a year ago. The White House separately said it was aware of reports of a missile strike on Saudi Arabia amid a campaign targeting the kingdom by Yemen’s Iranian-allied Houthi rebels.
Also helping the bulls out was news that OPEC and its allies, informally referred to as OPEC-plus, will hold meetings on July 1-2. The session was originally scheduled for June 25-26. The date resolution ended weeks of speculation around a moving target for when to hold the meeting, as Russia’s position on continued production restraint remains unclear.
Among the other energy contracts, July heating oil
rose 1.8% to $1.9187 a gallon.
July natural gas
rose 1.2% at $2.212 per million British thermal units. Its finish at $2.185 Thursday was the lowest front-month contract settlement since May 2016, after a larger-than-expected weekly rise in U.S. stockpiles.
The EIA reported Thursday that domestic supplies of natural gas rose by 115 billion cubic feet for the week ended June 14. The average forecast of analysts polled by S&P Global Platts had called for an increase of 104 billion cubic feet.