Published: Sat, July 13, 2019
Economy | By

Oil holds at seven-week high on gulf storm, U.S. stockpiles draw

Oil holds at seven-week high on gulf storm, U.S. stockpiles draw

Oil prices hit a six-week high on Thursday as oil rigs in the Gulf of Mexico were evacuated ahead of a storm, while an incident with a British tanker in the Middle East highlighted tensions in the region.

Gulf of Mexico operators have shut 602,715 barrels a day of oil production ahead of the storm, the Bureau of Safety and Environmental Enforcement said in a notice.

Tensions have been high in the Middle East after attacks on tankers and the downing of a US drone by Iran last month, following President Donald Trump's unilateral withdrawal from a multi-party agreement with Tehran to end its nuclear programme.

USA oil futures for August delivery finished 4.5 percent higher at 60.43 dollars a barrel, notching a seven-week high, according to Refinitiv.

Oil prices were also supported by a fall in the dollar after Federal Reserve Chairman Jerome Powell bolstered expectations for US interest rate cuts.

Still, U.S. output is rising again after a brief drop from record levels, according to the EIA.

The Organization of the Petroleum Exporting Countries gave its first 2020 forecasts in a monthly report, saying the world would need 29.27 million bpd of crude from its 14 members next year, down 1.34 million bpd from this year.

U.S. West Texas Intermediate crude futures were up 25 cents at $60.68 a barrel, having touched their highest since May 23 at $60.94.

Tropical Storm Barry formed with heavy rains expected across the north-central U.S. Gulf Coast, the National Hurricane Center said. The contract closed at the highest level since May 22 on Wednesday.

"Oil markets are being supported by factors peculiar to the summertime - hurricanes and high gasoline demand", said Satoru Yoshida, a commodities analyst at Rakuten Securities Tokyo.

The global benchmark Brent crude for September delivery gained 2.85 dollars, or 4.4 percent, to close at 67.01 dollars a barrel on the London ICE Futures Exchange, the highest finish since May 29. The global benchmark crude traded at a $6.50 premium to WTI for the same month. Royal Dutch Shell Plc and BP have also evacuated workers. Supplies fell by 9.5 million barrels in the week ending July 5, according to the Energy Information Administration. That in comparison with the median estimate in a Bloomberg survey for a 2.9 million-barrel decline. Three Iranian vessels attempted to impede the passage of a British oil tanker in the Strait of Hormuz, a spokesman for the United Kingdom government said in a statement on Thursday.

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