Oil is breaking out with biggest 2-day gain since November amid surprise drop in US crude stockpiles

Key Points
  • U.S. crude and Brent crude surge about $3 a barrel, or nearly 5 percent, over two days.
  • U.S. crude posted its best two-day performance since November.
  • Oil prices are supported by a surprise drop in U.S. crude stockpiles and geopolitical concerns.
A Shell Oil facility in Carson, California
Mike Blake | Reuters

Oil prices surged by about $3 a barrel over the last two days, boosted by a surprise drop in U.S. crude stockpiles and geopolitical concerns.

U.S. West Texas Intermediate crude ended Wednesday's session at $65.17, up about 5 percent from Monday's close of $62.06. That was the best two-day gain since the two sessions ended Nov. 6, when WTI surged nearly 5.2 percent.

Meanwhile, international benchmark futures finished the session at $69.47, rising about 5.2 percent from Monday's settlement at $66.05. That was also the best two-day performance since Nov. 6.

U.S. crude 5-day performance

The oil market extended gains on Wednesday after U.S. government data showed the country's stockpile of crude fell by 2.6 million barrels. Analysts in a Reuters poll had expected inventories to rise by 2.5 million barrels.

OPEC added to the bullish news on Wednesday, announcing that a group of two dozen oil producers had cut production far beyond agreed-upon levels in February. The 14-member OPEC cartel, along with Russia and other nations, is limiting output to drain a global glut of oil.

Tensions in the Middle East have also bolstered oil prices.

President Donald Trump on Tuesday met with Saudi Crown Prince Mohammed bin Salman at the White House. The president touted U.S. arms sales to the kingdom in public remarks, just days after Prince Mohammed said in a "60 Minutes" interview the Saudis would obtain a nuclear weapon if regional rival Iran develops one.

In just under two months, Trump could scrap the 2015 Iran nuclear deal and reimpose sanctions on Iran, which could disrupt oil flows from OPEC's third-biggest producer.