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Oil Trades Near Two-Week High on Tighter Supply, Mideast Risks


By Heesu Lee and Grant Smith

(Bloomberg) Oil traded near a two-week high in New York amid signs of a further drop in U.S. stockpiles and ongoing concerns that political friction in the Persian Gulf could disrupt exports.Futures rose as much as 1.1%. American crude inventories dropped by 6.02 million barrels last week, according to an industry report. If confirmed by government data on Wednesday, it will be a seventh weekly decline. BP Plc is avoiding sending ships through the Strait of Hormuz, Chief Executive Officer Bob Dudley said Tuesday, in a sign Middle East tensions could affect the flow of crude. Libya’s oil production dropped to the lowest in five months after an issue with a pipeline connected to its biggest field.

WTI crude extends advance after gaining 3.9% over the past four sessions

Oil is little changed this month after swinging between gains and losses as global growth concerns compete with the standoff in the Persian Gulf. While optimism that the U.S. Federal Reserve will cut interest rates is brightening the outlook for oil demand, a new round of trade talks between China and America showed little evidence of progress.

“Supply fundamentals still remain supportive of oil prices, and are tightening given the effectiveness of U.S. sanctions that have reduced Iran’s crude oil exports to a trickle,” said Harry Tchilinguirian, head of commodity markets strategy at BNP Paribas SA. But for “oil to move higher, the market is going to need a positive economic catalyst.”

West Texas Intermediate for September delivery rose as much as 62 cents to $58.67 a barrel on the New York Mercantile Exchange, and traded at $58.65 as of 8:47 a.m. local time. Prices are up for a fifth day, after climbing 2.1% on Tuesday, the biggest gain since July 10.

Brent crude for September, which expires Wednesday, added 54 cents to $65.26 a barrel on the ICE Futures Europe exchange, after rising 1.6% on Tuesday. The more-active October contract was at $65.19, up 56 cents. The September contract traded at a $6.85 premium to WTI for the same month.

See also: Guaido’s Envoy Says Chevron Waiver Is Bad News for Maduro Regime

A steady decline in U.S. crude inventories has alleviated some demand concerns. American stockpiles have dropped for six weeks through July 19, the longest run of losses since January 2018. Government data on Wednesday is forecast to show supplies fell by 2.75 million barrels, according to a Bloomberg survey, less than the American Petroleum Institute’s estimate.

Tensions have escalated in the Persian Gulf in recent months after a series of attacks on tankers and drones, while Iran is being subjected to U.S. sanctions that have squeezed its oil exports. The Middle East nation has reached a deal with Russia to hold a joint military drill in the Indian Ocean by March 2020, semi-official Fars News reported, citing the commander of the Iranian navy.

Oil-market news:
  • Libya’s oil production dropped to about 950,000 barrels a day after the unauthorized closing of a valve on a pipeline linking the Sharara oil field to an export terminal on the Mediterranean Sea.
  • Iran’s President Hassan Rouhani and his French counterpart Emmanuel Macron addressed regional tensions and the nuclear deal in a phone call, according to a statement on Rouhani’s website.
  • With five months to go until an unprecedented shift in the kind of fuel that merchant vessels must burn, the global shipping industry is under-hedged and — in many cases — wrongly hedged for the switch.


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