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Tanker Explosion in the Middle East Pushes Oil Prices Up

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Oil prices on June 13

As of today at 6:19 AM EST, US crude oil July futures had risen more than 3% from their last closing level. News of an oil tanker explosion in the Middle East led to the sharp rise in oil prices. The explosion occurred near the same area where last month’s attacks were carried out on oil tankers. However, the cause of the explosion is still unknown.

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Explosion helped oil prices to recover

On June 12, US crude oil July futures declined 4%. On the same day, the EIA reported a rise of 2.20 MMbbls (million barrels) in oil inventories for the week ended June 7 compared to a Reuters poll for a fall of 0.48 MMbbls. Moreover, gasoline inventories rose 0.8 MMbbls, slightly more than the Reuters poll.

Energy stocks might open higher

On June 13, energy stocks might open higher because of a rise in US crude oil prices. Energy stocks constitute 5.2% of the S&P 500 Index (SPY). A rise in oil prices because of a supply shock might push the S&P 500 higher today. Moreover, the Brent-WTI spread also reacted to the tanker explosion in the Middle East. The Brent-WTI spread expanded 35 cents from the previous day. Upstream stocks like ConocoPhillips (COP) and Pioneer Natural Resources (PXD) might benefit from the rise in the Brent-WTI spread. PXD oil price realization follows Brent crude oil prices.

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