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Oil near 6-week peaks on Mexico Gulf storm, ME tensions

Oil near 6-week peaks on Mexico Gulf storm, ME tensions

Mubasher: Oil traded close to six-week peaks on Friday, as it was heading for a weekly gain, as US oil companies in the Gulf of Mexico trimmed over half of their output, bracing for a tropical storm, while tensions were on the rise in the Middle East, Reuters reported.

By 9:00 am GMT, US Nymex crude futures rose by 0.81% to $60.69 per barrel (pb), after hitting $60.94 pb, their highest since 23 May in the prior session, while global benchmark Brent futures climbed by 1.05% to $67.22 pb, having reached $67.65 pb, the highest since 30 May. Nymex climbed by 5.4% this week, while Brent gained 4.4%.

“Brent crude oil [...] extended its gains as storms in the Gulf of Mexico halted production of oil and US oil inventories continued to recede more than expected,” a note by Australia and New Zealand (ANZ) Bank was quoted by Reuters.

Oil producers in the Gulf of Mexico slashed more than 1 million barrels per day (bpd), or 53% of the region’s output, due to the brewing Tropical Storm Barry which could make landfall on Saturday on the Louisiana coast.

The storm was set to make a category one hurricane with winds of at least 74 miles per hour (119 kilometres per hour).

In addition, US oil stockpiles have posted an extended decline for the fourth week in a row. US crude inventories dropped by 9.5 million barrels in the week ending 5 July, as per reported by the Energy Information Administration (EIA).

In the Middle East, tensions remained heightened, as with Iran’s alleged attempt to intercept a British oil tanker.

On Friday, a foreign ministry spokesman told state-run agency IRNA that Tehran called on the UK to immediately release an oil carrier that the British Royal Marines seized last week on allegations that it was violating European sanctions by shipping crude to Syria, according to Reuters.

Nevertheless, the Organization of the Petroleum Exporting Countries (OPEC) projected a lower oil consumption next year, keeping the price gains in check.

The world would need 29.27 million bpd of crude from the 14-member producer club in 2020, down by 1.34 million bpd this year.