Oil holds at seven-week high on gulf storm, USA stockpiles draw

Andrew Cummings
July 13, 2019

US West Texas Intermediate crude futures were up 31 cents, at US$60.74 a barrel, having earlier touched their highest since May 23 at US$60.94.

Additionally, tensions in the Middle East deepened on reports that three Iranian boats "attempted to impede" a British oil tanker in the Gulf.

Federal Reserve chairman Jerome Powell said there were risks that prices gains in the United States might persistently undershoot the central bank's inflation target and that the country's labour market was not running hot.

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, in its monthly report, forecast global crude demand from its members in 2020 is likely to be 29.27 million barrels per day, down 1.34 million bpd from this year.

"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 Inc.in Tokyo. The contract closed at the highest level since May 22 on Wednesday.

Brent crude was trading down $0.35, or 0.52% at $66.66 per barrel.

Surging U.S. oil output will outpace sluggish global demand and lead to a large stocks build around the world in the next nine months, the International Energy Agency (IEA) said on Friday.

Major producers from BP Plc to Chevron Corp. have evacuated crew from offshore installations, halting a third of the Gulf's output because of the storm. The worldwide benchmark indecent traded at a US$6.47 premium to WTI for the identical month.

A storm expected to form along the Gulf of Mexico also helped oil prices. Chevron said Tuesday it began closing five of its platforms and will start moving out all associated personnel.

The Energy Information Administration reported Wednesday that US crude stockpiles fell by 9.5 million barrels last week to the lowest in nearly three months.

Data released by Energy Information Administration (EIA) Wednesday morning showed USA crude stockpiles fell by 9.5 million barrels in the week ended July 5, almost five times the expected drop. That in comparison with the median estimate in a Bloomberg survey for a 2.9 million-barrel decline.

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 USA defence official said on Thursday.

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