Gulf Of Mexico Hurricane Threat Push Up US Oil Futures

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Yemisi Izuora 

The US oil futures hit their highest in over a month on Thursday as a potential hurricane threatened crude output in the Gulf of Mexico and as an incident involving a British tanker in the Middle East highlighted ongoing tensions there.

The US West Texas Intermediate (WTI) crude futures were up 11 cents at $60.54 a barrel after earlier touching the highest since May 23 at $60.63. They gained 4.5 per cent in the previous session.

Also, Brent crude futures were down 5 cents, or 0.1 per cent, at $66.96 a barrel, after ending Wednesday up 4.4 per cent.

Five boats believed to belong to Iranian Revolutionary Guards approached a British oil tanker on Wednesday and asked it to stop in Iranian waters close by, but withdrew after a British warship warned them over radio, a US defence official said on Thursday.

Tensions have been high in the Middle East after attacks on tankers and the downing of a US drone by Iran last month, following President Donald Trump’s unilateral withdrawal from a multi-party agreement with Tehran to end its nuclear programme.

US oil producers on Wednesday cut nearly a third of Gulf of Mexico crude output as what could be one of the first major storms of the Atlantic hurricane season threatened offshore oil production and began soaking Louisiana with heavy rains.

Fifteen production platforms and four rigs were evacuated in the north central Gulf of Mexico, according to a US regulator as oil firms moved workers to safety ahead of a storm expected to become a hurricane by Friday.

Operations at the Louisiana Offshore Oil Port, the only US port where the largest crude tankers can load and unload, were normal on Wednesday morning, a spokeswoman said.

Also supporting oil prices is a decline in US inventories. US crude stocks fell 9.5 million barrels in the week to July 5, the Energy Information Administration (EIA) said, a drop of more than triple the 3.1 million-barrel draw analysts had expected as refineries ramped up output.

“There is nothing like an early start to the hurricane season to support oil prices, but looking under the hood of the EIA data, it paints an even rosier picture for US oil markets,” said Stephen Innes, managing partner, Vanguard Markets in Bangkok. 

“Imports down, exports likely up and refinery utilisation at yearly highs,” he said.

Stocks have now fallen for four consecutive weeks, according to the EIA, and this week’s official data follows similar industry estimates from the American Petroleum Institute on Tuesday, which showed a large drop in stocks of 8.1 million barrels. 

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