(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 edged higher in New York after climbing 4.5% on Wednesday to close above $60 a barrel for the first time since May. Major producers from BP (LON:BP) Plc to Chevron Corp. (NYSE:CVX) 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 opened higher and the dollar fell 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 19 cents, or 0.3%, to $60.62 a barrel on the New York Mercantile Exchange as of 10:29 a.m. in Singapore after rising as much as 27 cents earlier. The contract closed at the highest level since May 22 on Wednesday.
Brent for September settlement added 6 cents to $67.07 a barrel on the ICE (NYSE: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 $6.37 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 (LON:RDSa) Plc has also evacuated non-essential personnel at seven platforms and BP also began removing offshore personnel.
GULF COAST STORM WRAP: 32% of Oil, 18% of Gas Output Shut (2)
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. Five Iranian Islamic Revolutionary Guards boats tried to seize a British oil tanker in the Persian Gulf Wednesday, CNN reported, citing two U.S. officials. 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.
