Published: Wed, July 10, 2019
Markets | By Otis Pena

Supply draw, Gulf of Mexico storm push oil prices upward

Supply draw, Gulf of Mexico storm push oil prices upward

Oil prices rose more than 2% on Wednesday after industry data showed US inventories fell more than expected and as major USA producers evacuated rigs in the Gulf of Mexico before a storm.

An oil pump is seen at sunset outside Vaudoy-en-Brie, near Paris, France April 23, 2018.

Meanwhile, West Texas Intermediate crude prices rose 1.61 per cent to Dollars 58.76, while global benchmark Brent went up 1.03 per cent to USD 64.82 per barrel at the New York Mercantile Exchange.

Brent crude futures LCOc1 were up $1.92, or 3%, to $66.08 a barrel by 10:49 a.m. EDT (1449 GMT).U.S.

Late Tuesday, the API reported a larger-than-expected crude oil inventory draw of 8.129 million barrels for the week-ending July 4.

The current sideways action and the bouncing between technical 50% levels suggests prices are almost balanced at this time, which means it may take some fresh stimulus to move prices out of the range.

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The rate of growth was the slowest since August 2016 when the PPI last dipped into negative territory. Analysts polled by Reuters had expected producer price inflation to slow to 0.3 per cent in June.

Among the companies that have started moving staff from the Gulf are Shell, Chevron, BP, and BHP, while Exxon is keeping an eye on the weather developments for the time being to establish which of its platforms could find themselves in the way of the storm.

In Venezuela, supply fell slightly in June due to the impact of USA sanctions on state oil company PDVSA and a long-term decline in production, according to the survey.

"Assuming that it [the storm] will cause some evacuations, then you would expect it to have a limited short-term impact but perhaps it's a bit too early to say" said Paul Horsnell, head of commodities research at Standard Chartered.

Iran's President Hassan Rouhani said on Wednesday Britain would face "consequences" over the seizure of an Iranian oil tanker near the coast of Gibraltar last week. -China trade war that has dampened prospects for global economic growth. Major organizations have downgraded oil demand growth forecasts to reflect uncertainties about the global economy and the U.S. Brent has risen nearly 20% in 2019 supported by the pact and also tensions in the Middle East, especially concerns about the row over Iran's nuclear program.

In recent months, the economic slowdown has influenced prices more than supply cuts following US sanctions on Venezuela and Iran, OPEC's extension of its oil pact to the first quarter of 2020 and larger-than-expected output reductions by Saudi Arabia, the EIA said.

U.S. oil production will continue to break output records into 2020, but may be growing at a slower rate than previously expected, the U.S. Energy Information Administration said in its short-term energy outlook on Tuesday.

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