(Bloomberg) -- Oil posted its biggest intraday jump in two weeks after industry data showed a larger-than-expected decline in crude inventories last week.
Futures in New York climbed as much as 3.9% Tuesday as the industry-funded American Petroleum Institute reported nationwide crude stockpiles fell 11.1 million barrels. That would be the largest decline since June if government data confirms it Wednesday. The API also reported a draw in gasoline and distillates totaling about 2.8 million barrels.
West Texas Intermediate crude had rallied ahead of the close, as investors anticipated the bullish API report.
“The word on the street was that the API would report of 3 million barrels if not greater. And there would also be a stock draw in distillates and gasoline,” according to Daniel Flynn, an energy analyst for Chicago-based Price Futures Group.
Earlier in the session, the market drew some support from news that Iran’s Foreign Minister Javad Zarif had all but ruled out a meeting with the U.S. a day after President Donald Trump floated the idea of easing restrictions on the Islamic Republic.
The move quashed the possibility of future sanctions waivers for buyers of Iranian oil, said Bart Melek, head of global commodities strategies at TD Securities in Toronto. “So there is no hope of any kind of relief in oil supply from Iran.”
Still, the U.S.-China trade war has kept a lid on prices. Crude has fallen over 6% this month as the trade war undermines the demand outlook for oil.
Trump struck a conciliatory tone at the Group of Seven meeting in France, praising the willingness of China’s top trade negotiator, Vice Premier Liu He, to find a solution to the dispute. However, he didn’t indicate he planned to back down in the long term.
READ: OPEC+ Expects to Drain Oil Stocks as It Makes Supersized Cuts
West Texas Intermediate crude for October delivery rose $1.92 to $55.56 at 4:51 p.m. after settling at $54.93 on the New York Mercantile Exchange.
Brent for October gained $1.28 to $59.98 after settling at $59.51 a barrel on the ICE Futures Europe Exchange. The global benchmark crude traded at a premium of $4.42 to WTI.
--With assistance from Grant Smith.
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