Oil gains on USA inventory drawdown, Gulf of Mexico storm

US oil stockpiles fell by 8.13 million barrels last week spurring a spike in oil prices

Oil held gains after closing at a seven-week high as output in the Gulf of Mexico was shut ahead of a potential hurricane and US crude inventories shrunk more than expected.

Disappointing U.S. crude inventories and the looming storm in the Gulf of Mexico which may disrupt oil production, among others, contributed to the upswing, experts noted.

Also adding to concern is an incident with a British tanker in the Middle East.

A decline in USA inventories also boosted oil prices.

Futures in NY were little changed after settling above US$60 a barrel on Wednesday for the first time since May. A fourth weekly draw in American stockpiles and signs that the Federal Reserve is prepared to cut interest rates also supported prices.

US West Texas Intermediate crude futures were up 31 cents, at US$60.74 a barrel, having earlier touched their highest since May 23 at US$60.94. U.S. President Donald Trump vowed Wednesday to impose more sanctions on Iran and accused it of violating the nuclear accord that he withdrew from previous year.

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According to the report, the higher non-OPEC production forecast is based to the debottlenecking of oil infrastructure in North America and new project ramp ups in Brazil, Norway and Australia.

Brent for September settlement slipped 4 cents to $66.97 a barrel on the ICE Futures Europe Exchange. It climbed 4.4 per cent to US$67.01 on Wednesday, the ideal shut since Might 29. The global benchmark crude traded at a US$6.58 premium to WTI for the same month.

"The spoil above US$60 is susceptible to entice some extra non eternal momentum, however if the storm passes in the Gulf of Mexico, lets watch that depart away because the point of hobby returns to search files from worries", mentioned Ole Sloth Hansen, head of commodity approach at Saxo Monetary institution A/S in Copenhagen. Chevron said Tuesday it began closing five of its platforms and will start moving out all associated personnel. Three Iranian vessels attempted to impede the passage of a British oil tanker in the Strait of Hormuz, a spokesman for the United Kingdom government said in a statement on Thursday.

Data released by Energy Information Administration (EIA) Wednesday morning showed USA crude stockpiles fell by 9.5 million barrels in the week ended July 5, almost five times the expected drop.

At current OPEC output levels of 30 million bpd, the IEA predicted that global oil stocks could rise by 136 million barrels by the end of the first quarter of 2020.

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