(Bloomberg) -- Oil extended gains after closing at a seven-week high as around a third of the Gulf of Mexico’s crude output was cut before a potential hurricane and U.S. crude inventories shrunk more than expected.
Futures in New York rose as much as 0.7% after climbing 4.5% on Wednesday to close above $60 a barrel for the first time since May. Major producers from BP Plc to Chevron Corp. have crews from offshore installations due to the storm, which could grow into a hurricane this week. A fourth weekly draw in American stockpiles and Federal Reserve Chairman Jerome Powell’s the central bank is preparing to cut interest rates added to the bullishness.
Oil has been rallying since the middle of last week as tensions surrounding Iran stoke concerns crude flows may be disrupted. President Donald Trump Wednesday to impose more sanctions on the Islamic Republic and accused it of violating the nuclear accord that he withdrew from last year, while French President Emmanuel Macron is to salvage the deal. Asian stocks climbed and the dollar weakened following Powell’s comments.
“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. Expectations for a U.S. interest-rate cut and the tension in the Middle East are also helping, he said.
West Texas Intermediate crude for August delivery gained 23 cents, or 0.4%, to $60.66 a barrel on the New York Mercantile Exchange as of 7:23 a.m. in London after rising as much as 40 cents earlier. The contract closed at the highest level since May 22 on Wednesday.
Brent for September settlement added 22 cents, or 0.3%, to $67.23 a barrel on the ICE Futures Europe Exchange. It climbed 4.4% to $67.01 on Wednesday, the highest close since May 29. The global benchmark crude traded at a $6.50 premium to WTI for the same month.
Gulf of Mexico operators have shut 602,715 barrels a day of oil oil rig flanges gulf coast production ahead of the storm, the Bureau of Safety and Environmental Enforcement said in a notice. Chevron said Tuesday it began shutting in five of its platforms in the Gulf and will start evacuating all associated personnel. Royal Dutch Shell Plc has also evacuated non-essential personnel at seven platforms and BP also began removing offshore personnel.
The Energy Information Administration reported Wednesday that U.S. crude stockpiles fell by 9.5 million barrels last week to the lowest in almost three months. That compared with the median estimate in a Bloomberg survey for a 2.9 million barrel decline.
The situation in the Middle East remained tense. Three Iranian vessels attempted to impede the passage of a British oil tanker in the Strait of Hormuz, a spokesman for the U.K. government said in a statement on Thursday. That came after Iran’s military to retaliate against the U.K.’s seizure of a tanker loaded with Iran’s crude off the coast of Gibraltar last week.
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Andrew Janes, Ben Sharples