May 15 (UPI) -- An expected dip in oil inventory levels in an already-tight market, coupled with lingering geopolitical risk, pushed oil prices higher in Tuesday trading.
"European and Asian buyers of Brent are pricing in the risks and realities of the fallout from sanctions on Iran to increased tensions in the Gaza strip as well as the inability of traditional Brent oil producers to fill that void," Phil Flynn, the senior market analyst for the PRICE Futures Group in Chicago, said in a daily emailed newsletter.
The price for Brent crude oil, the global benchmark for the price of oil, is up more than 5 percent since U.S. President Donald Trump walked away from a U.N.-backed agreement that limited Iranian nuclear activity in exchange for relief from sanctions. That decision could eventually sideline about 1 million barrels of oil from a market with no spare capacity.
In the United States, a survey of analysts from S&P Global Platts revealed expectations of a 2.3 million barrel decline in commercial crude oil inventories in the world's leading economy. An oversupply situation pulled the price of oil below $30 per barrel two years ago and the opposite is happening as that extra supply vanishes.
Markets rallied in Monday trading after Israeli forces fired on Palestinians protesting the opening of the U.S. Embassy in Jerusalem. Gains in broader stock markets spilled over into commodities on signs of a thaw in trade tensions between the United States and China, the world's leading economies.
The National Bureau of Statistics in Beijing, meanwhile, reported a mixed economic bag on Tuesday. Industrial output in the Chinese economy accelerated 7 percent last month, gaining a full percentage point from March.
"China's economy maintained its trend of steady development in April," NBS spokesperson Liu Aihua was quoted by the official Xinhua News Agency as saying.
Liu cautioned, however, that trade tensions with the United States could be an eventual detriment to growth. Retail sales of consumer goods declined slightly from 10.1 percent in March to 9.4 percent growth last month.