Oil holds gains as storm approaches Gulf of Mexico
Singapore — Oil was steady on Thursday, holding gains from the previous session after another fall in US crude inventories indicated a tighter market, and as a tropical storm was heading for oil producing facilities in the Gulf of Mexico.
Brent crude futures, the international benchmark for oil prices, were up 1c at $52.58 a barrel at 4.38am GMT.
US West Texas Intermediate (WTI) crude futures were down 4c at $48.37 a barrel.
Both crude futures contracts rose more than 1% on Wednesday, also buoyed by potential output disruptions from the Gulf of Mexico storm.
“For the next few days, the US market is going to be focused on Texas as the tropical depression Harvey is expected to strengthen into a Category I hurricane by Friday,” Sukrit Vijayakar, director of energy consultancy Trifecta, said in a note.
“Operators in the area are already closing down platforms and evacuating workers as a precaution,” he said.
Harvey strengthened into a tropical storm late on Wednesday night with winds of about 65km/h and was located about 700km southeast of Port Mansfield, Texas, the US National Hurricane Center reported.
Royal Dutch Shell, Anadarko Petroleum and Exxon Mobil have all said they have taken steps to curb some oil and gas output at platforms in the Gulf.
Beyond the weather, traders said that ongoing declines in US commercial crude storage levels were a sign of a gradually tightening market, although another rise in output held the market back.
“Another strong drawdown in US crude oil inventories should see oil prices well supported,” ANZ bank said, but added that “there was a hint of cautiousness, with US oil output continuing to push higher”.
US oil production hit 9.53-million barrels a day last week, the highest level since July 2015 and up more than 13% from their most recent low in mid-2016.
Despite this, US crude stocks fell last week and petrol stocks were down as well, the Energy Information Administration said on Wednesday.
Crude inventories fell by 3.3-million barrels in the week ending August 18, to 463.17-million barrels, down 13.5% from their record levels last March.