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July 3, 2018 10:45 AM, EDT

Oil Surges Above $75 in New York as Supply Outages Outpace OPEC

Daniel Acker/Bloomberg News

Crude soared above $75 a barrel in New York for the first time since 2014 on signs global supply outages outweigh OPEC’s pledged production rise.

Futures in New York jumped as much as 1.7%. Even as President Donald Trump — facing sky-high retail gasoline prices ahead of midterm elections — pushes Saudi Arabia to boost output more than it planned, outages around the world from Libya to Canada and Venezuela are keeping prices elevated. U.S. crude stockpiles, already the lowest since January, are expected to tighten further.

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The market “is anticipating a very bullish number” in the July 5 inventory report, said Bob Yawger, director of futures at Mizuho Securities USA Inc. in New York. “All eyes will be on that Cushing number.”

Oil is surging as the U.S. pushes allies to end imports of Iranian crude, as global supply disruptions persist and American crude inventories are already at the lowest since January.

Morgan Stanley raised its Brent crude forecast to $85 a barrel through the third quarter of 2019, citing a tighter market than previously anticipated.

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West Texas Intermediate crude for August delivery jumped $1.19 to $75.13 a barrel in the early morning July 3 on the New York Mercantile Exchange.

The premium for near-term U.S. oil over longer-dated contracts increased as analysts forecast continued shrinking supplies in the key Cushing, Okla., supply hub. The prompt WTI spread was at $2.41 on July 3 after closing at its widest since 2014 on July 2.

Brent for September settlement advanced $1.05 to $78.35 a barrel on the London-based ICE Futures Europe exchange. The global benchmark traded at a $5.64 premium to WTI for September.

U.S. crude stockpiles are forecast to have declined 5 million barrels last week, according to a Bloomberg News survey ahead of government data released July 5.

Inventories at Cushing fell 2 million barrels the week of June 25, according to a separate forecast compiled by Bloomberg.

In other oil-market news, Abu Dhabi said it’s ready to increase oil output in line with guidance set by OPEC and allied producers, echoing comments by Saudi Arabia that it will boost supply to meet demand.

With assistance from Tsuyoshi Inajima, Sharon Cho and Grant Smith.