Top Stories
Top Stories

UPDATE 2-Oil prices jump on U.S. crude stocks fall, major refinery outage

Julia Payne

* Brent, WTI hit highest levels since end-May

* Philadelphia refinery could shut down permanently

* U.S.-Iran tensions underpin prices

* API data shows U.S. crude stocks down 7.5 mln barrels

* Upcoming: U.S. EIA data at 1430 GMT (Changes dateline, changes throughout, updates prices)

LONDON, June 26 (Reuters) - Oil prices hit their highest level in nearly a month on Wednesday, buoyed by an outage at a major refinery on the U.S. East Coast and industry data that showed U.S. crude stockpiles fell more than expected.

Front-month Brent crude futures, the international benchmark for oil, were up $1.03 a barrel at $66.08 by 0721 GMT. They earlier touched their highest since May 31 at $66.25 a barrel.

U.S. West Texas Intermediate (WTI) crude futures were at $58.96 per barrel, up $1.13 from their last settlement. WTI earlier hit its strongest level since May 30 at $59.13 a barrel.

Philadelphia Energy Solutions (PES) is expected to seek to permanently shut its oil refinery in the city after a massive fire caused substantial damage to the complex, two sources familiar with the plans said on Tuesday.

PES, located in the busiest and most densely populated corridor of the U.S., had already declared force majeure on gasoline supplies following the fire. U.S. gasoline futures hit their highest level since end-May.

"Oil is up in reaction to the API data combined with the refinery disruption on the U.S. East Coast. Gasoline is up and leading the complex and helping to keep momentum up on crude," Olivier Jakob of Petromatrix consultancy in Switzerland said.

"Refinery margins are improving globally because if that refinery can't operate then you'll have to compensate with higher runs elsewhere."

U.S. crude stockpiles fell by 7.5 million barrels in the week ended June 21 to 474.5 million, compared with analyst expectations for a decline of 2.5 million barrels, American Petroleum Institute (API) data showed.

Crude stocks at U.S. delivery hub Cushing, Oklahoma, fell by 1.3 million barrels.

The crude inventory fall and refinery outage come at a time when conflict between Washington and Tehran has stoked fears that shipments passing through the Strait of Hormuz - the world's busiest oil supply route - could be disrupted.

U.S. President Donald Trump threatened on Tuesday to obliterate parts of Iran if it attacked "anything American," in a new war of words with Iran. Tehran has condemned a fresh round of U.S. sanctions as "mentally retarded."

Bilateral tensions spiked anew after Iran shot down a U.S. drone last week in the Gulf. Relations have been tense since Washington blamed attacks on oil tankers just outside the Gulf in May and June on Iran, while Tehran has denied any role. (Additional reporting by Colin Packham in Sydney, Editing by Joseph Radford, Tom Hogue and Deepa Babington)