On Friday, due to a tropical storm, U.S. oil producers in the Gulf of Mexico cut more than half their output. Also, tensions continued to rumble in the Middle East.
Moreover, oil prices soared near six-week highs and were on track for a weekly gain on Friday.
On Thursday, Brent crude futures improved 57 cents, or 0.9%, at $67.09 per barrel. The international benchmark was stable 0.7% after hitting its highest since May 30 at $67.65.
In the previous session, the U.S. benchmark grew to as much as $60.94, its highest since May 23. Meanwhile, U.S. West Texas Intermediate crude futures gained 46 cents, or 0.8%, at $60.66 a barrel.
Last week, declines were both posted by benchmarks crudes. But, this week, prices of Brent have scaled 4.4% with WTI prices gaining 5.4%.
Due to the Tropical Storm Barry, which possibly will make landfall on Saturday at the Louisiana coast, an estimated 1 million barrels per day of output, or 53% of the region’s production was cut down by the oil companies in the Gulf of Mexico.
With winds of at least 74 miles per hour 119 km per hour, the storm was predicted to become a category one hurricane.
In a note, ANZ Bank said, “Brent crude oil extended its earnings as storms in the Gulf of Mexico halted production of oil.”
Furthermore, “also and U.S. oil inventories continued to recede more than expected.”
For four consecutive weeks, U.S. crude oil inventories have declined. In the week to July 5, 9.5 million barrels plunged in the Crude stocks.
Moreover, the Energy Information Administration said the analyst expected the decline more than triple the 3.1 million-barrel draw.
To keep both Brent and WTI at current levels, the sharp drop in U.S. crude stocks and geopolitical risks are expected as stated by a commodity analyst at Samsung Futures in Seoul, Kim Kwang-rae.
Kim said, “As geopolitical risks involving Iran are likely to persist, that would support WTI to stay above $60 a barrel.”
He also added, “Brent is expected to stay above $65 per barrel but below $70 for the time being.”
Iran Suspected by Britain Of Attacks
In June, a British-owned tanker lifted tensions in the Middle East with the wake of attacks on tankers and the set-down of U.S. drone by Iran happens. Suspected to be doing the blocking was Iran.
In a news report, a foreign ministry spokesman said Britain on Friday called Iran for an immediate release of an oil tanker that British Royal Marines held last week.
It has happened because Britain doubts it was breaking European sanctions by takinsg oil to Syria.
A senior market analyst at PANDA in New York, Edward Moya said, “While a full-scale military conflict remains the least likely scenario, the strong increases for cost of insurance will make for most costly transportation of crude.”
The Organization of the Petroleum Exporting Countries outlook of a lower 2020 oil demand reserve price gains in check.
This year, OPEC requires its 14 members in 2020 to have a 29.27 million bpd of crude for it has declined 1.34 million bpd today.