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U.S. crude hits highest since 2014 on missile concerns

Reuters  |  NEW YORK 

By Jessica Resnick-Ault

NEW YORK (Reuters) - prices jumped on Wednesday, hitting their highest in more than three years on Wednesday after said it intercepted missiles over and U.S. warned of imminent military action in

Both U.S. crude and global benchmark Brent traded at the highest levels since 2014 as geopolitical concerns overshadowed a surprise build in U.S. crude inventories.

"A bearish inventory report was quickly negated on word of intercepted rockets over Riyadh, which just adds to the recent spike in geopolitical tensions," said Anthony Headrick, market analyst and at

Prices began to rally as Trump threatened to fire missiles at and its allies have been considering air strikes following a

climbed further as broadcaster Al Arabiya said Saudi Arabia's air defence forces intercepted a missile over the capital

Brent rose $1.02 on the day to settle at $72.06 a barrel, having touched a session high of $73.09. U.S. crude futures rose $1.31 to settle at $66.82 a barrel, a 2 percent gain, having traded as high as $67.45.

Some major airlines were re-routing flights after Europe's air traffic control agency urged caution for aircraft flying in the due to possible air strikes on

Trump has criticized for standing by Syrian

"vows to shoot down any and all missiles fired at Get ready Russia, because they will be coming, nice and new and 'smart!'," he wrote in a post on

is not a significant producer, but any sign of conflict in the region triggers concern about crude flows across the wider Reports of missiles in exacerbated those worries, on top of existing concerns the could renew sanctions against

Commerzbank's said market fundamentals "do not justify the current price, but unfortunately the market is focusing more on the and ignoring some of the warning signs, especially the hike in U.S. production."

Minister said his country would not let another supply glut surface, implying that the of the Organization of the Petroleum Exporting Countries (OPEC) would continue to withhold supply.

Not all market indicators suggest the price will continue to rally strongly, analysts said.

U.S. crude inventories rose by 3.3 million barrels in the week to April 6, according to the Information Administration. The big build was a surprise after analysts had forecast a decrease of 189,000 barrels.

Despite oil's price spike after the rocket over Riyadh, the market remains focused on fundamentals, said Abhishek Kumar, analyst at in

"Market participants will closely watch in the U.S., which is also expected to have a material impact on the outcome of the upcoming OPEC meeting in June," he said.

(Additional reporting by in Singapore and Amanda Cooper in London; Editing by and David Goodman)

(Only the headline and picture of this report may have been reworked by the Business Standard staff; the rest of the content is auto-generated from a syndicated feed.)

First Published: Thu, April 12 2018. 01:21 IST