Oil Jumps on Gulf Storm and Stockpile Draw
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 evacuated 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 signal 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 vowed
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 trying 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 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 vowed to retaliate against the U.K.’s seizure of a tanker loaded with Iran’s crude off the coast of Gibraltar last week.