Oil rebounds back above $70 a barrel as supply optimism overshadows Iran deal

Oil futures rebounded early Wednesday, hitting levels near the 3 1/2-year high after bullish data on U.S. oil inventories, and in the wake of the U.S. pulling out of the Iran nuclear deal.

Crude prices have swung wildly in recent days, as investors anticipated Trumps decision on whether to withdraw from the Iran deal. Oil futures started sliding in the U.S. late Monday, and fell as much as 4% in morning trade Tuesday before Trump announced his decision to abandon it. Crude clawed back some of its decline after Trumps speech to settle about 2% lower.

Recently, June West Texas Intermediate crude oil
CLM8, +2.17%
rose $1.54, or 2.2%, to $70.60 a barrel, putting it back at highs seen Monday, when crude settled at $70.73 a barrel, the highest settlement for a front-month contract since Nov. 26, 2014. On Tuesday, it settled down 2.4% to $69.06 a barrel.

International benchmark July Brent crude
LCON8, +2.38%
climbed $1.82, or 2.4%, to $76.67 a barrel, after closing down 1.7% to $74.85 a barrel on Tuesday.

Data from the American Petroleum Institute helped fuel the rebound, with U.S. crude, gasoline and distillate inventories logging sizable declines last week. U.S. crude supplies fell nearly 1.9 million barrels for the week ended May 4, the API reported, according to sources.

The weekly government report due later Wednesday is expected to show smaller declines. Analysts polled by S&P Global Platts expect the Energy Information Administration to report a decline of 400,000 barrels in crude supplies. They also forecast supply declines of 600,000 barrels for gasoline and 1.9 million barrels for distillates.

Opinion: Trump decision on Iran nuclear treaty shows fragility of global nonproliferation efforts

Separately, Saudi Arabia pledged to help stabilize global oil markets after Trump said the U.S. will withdraw from the 2015 Iran nuclear deal and reimpose the highest level of economic sanctions against Iran, which could eventually hit global oil supplies. The prospect of lower production has helped push crude prices to 3 1/2-year highs in recent weeks.

The deal between Iran and a group of world powers had lifted most U.S. and international sanctions on Tehran in return for its agreement to curb its nuclear activities. Some analysts have said the reinstatement of sanctions could lead to tighter global oil supplies as they make it more difficult for Iran to export oil.

Read: Heres what sanctions on Iran could do to global oil supply and prices

After the roller-coaster ride Tuesday, its difficult to know exactly where prices are headed amid the Iran, API and Saudi Arabia announcements, said Greg McKenna, chief market strategist at AxiTrader. But overall, oil is still in a solid uptrend.

Among other energy products traded on Nymex, June gasoline
RBM8, +1.85%
rose 1.9% to $2.151 a gallon, while June heating oil
HOM8, +1.98%
jumped 2% to $2.201 a gallon. June natural gas
NGM18, +0.22%
rose 0.3% to $2.739 per million British thermal units.

Barbara Kollmeyer contributed to this article

Related Topics Futures Commodities Markets Commodity Futures Trading Commission Oil

Quote References CLM8 +1.50 +2.17% LCON8 +1.78 +2.38% RBM8 +0.04 +1.85% HOM8 +0.04 +1.98%

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