Published: Sat, July 13, 2019
Markets | By Otis Pena

Oil at six-week high on Gulf of Mexico storm, supply decline

Oil at six-week high on Gulf of Mexico storm, supply decline

A fourth weekly draw in US crude stockpiles and signs that the Federal Reserve is prepared to cut interest rates also supported prices.

Major oil firms began evacuating and shutting in production in the Gulf of Mexico after weather forecasts warned that a tropical disturbance might become a storm on Wednesday or Thursday.

Futures in NY rose as much as 0.8 per cent after settling above US$60 a barrel on Wednesday for the first time since May.

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

U.S. West Texas Intermediate (WTI) crude futures were up 32 cents, or 0.5%, at $60.75 a barrel, having earlier touched their highest since May 23 at $60.83.

Tensions in West Asia worsened today after gunboats of the Iranian Revolutionary Guards asked a British oil tanker to stop in Iranian waters, but later withdrew following warning from a British warship warned, United States officials said. U.S. President Donald Trump vowed Wednesday to impose extra sanctions on Iran and accused it of violating the nuclear accord that he withdrew from closing year.

"Imports down, exports likely up and refinery utilisation at yearly highs", he said.

USA may lift some sanctions if North Korea halts nuclear programme
They are keen to see a freeze in this production too. The potential offer would see the suspension of U.N. He met Kim three times a year ago .

At 1625 IST, the July crude contract on MCX was 1% higher at 4,157 rupees a bbl and the August delivery contract on NYMEX was 0.5% higher at $60.73 a bbl.

Brent crude futures reversed early losses and were up 40 cents at $67.41 a barrel by 0852 GMT. It climbed 4.4% to $67.01 on Wednesday, the highest close since May 29.

The Gulf of Mexico is home to 17% of US crude oil output which stands at around 12 million barrels per day (bpd).

The National Hurricane Center predicts that a tropical storm is expected to form in the Gulf of Mexico by Thursday and strengthen to a hurricane by the weekend. Royal Dutch Shell Plc and BP have also evacuated workers.

According to the Weekly Petroleum Status Report, U.S. commercial crude oil inventories, excluding those in the Strategic Petroleum Reserve, decreased by 9.5 million barrels from the previous week to 459.0 million barrels. Non-OPEC oil supply, however, may grow by 2.4 million barrels per day in 2020 from the current year.

Five boats believed to belong to Iranian Revolutionary Guards approached a British oil tanker on Wednesday and asked it to stop in Iranian waters close by, but withdrew after a British warship warned them over radio, a US defence official said on Thursday.

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