Oil Rises on Supply Risks After Longest Losing Run Since 2015

Oil rose in New York and headed for its first weekly gain in two months amid signs of tighter supply from the North Sea to the Middle East.

Futures in New York are headed for a gain of almost 4 percent this week, ending their longest run of weekly losses since 2015. U.S. crude stockpiles dropped by more than twice what analysts expected last week, while strikes at Total SA’s fields in the North Sea could curb supply. Iran’s exports are set to decline sharply as renewed U.S. sanctions take effect, analysts at FGE and Cowen & Co. said.

“This week marks an impressive rebound in fortunes for the oil market,” said Stephen Brennock, an analyst at PVM Oil Associates Ltd. in London. “This is largely due to a tightening fundamental outlook on the back of looming Iranian supply shortages.”

Oil has recovered about 5 percent since sinking in mid-August to the lowest in almost two months, amid supply threats in Iran and Venezuela and as a slide in the U.S. currency makes dollar-priced assets more attractive. Yet gains have been offset by concern that the trade dispute between the U.S. and China, and risk of contagion from Turkey’s economic crisis, could hurt global oil demand.

West Texas Intermediate crude for October delivery rose as much as 67 cents, or 1 percent, to $68.50 a barrel on the New York Mercantile Exchange, the highest since Aug. 8. It traded for $68.43 as of 10:36 a.m. London time. Total volume traded was about 27 percent below the 100-day average.

Brent for October settlement increased as much as 76 cents, or 1 percent, to $75.49 a barrel on the London-based ICE Futures Europe exchange, the highest since July 13. The contract is up 4.8 percent on the week. The global benchmark crude traded at a $6.83 premium to WTI.

U.K. Strike

The North Sea industry faces further industrial action from next month. The Alwyn, Dunbar and Elgin fields operated by Total SA will be affected by a series of 12-hour strikes after talks on pay and working hours broke down, the U.K.’s Unite union said on Thursday.

U.S. government data released on Wednesday showed that nation’s crude stockpiles declined by 5.84 million barrels last week, more than double the forecast in a Bloomberg survey of analysts.

Industry consultant FGE predicts that Iranian oil exports will drop below 1 million barrels a day by the middle of next year after the U.S. reimposes sanctions targeting its crude in early November. The Persian Gulf nation has shipped about 2.5 million barrels a day of crude and condensate so far this year, FGE said in a report on Aug. 23.

Still, investors remain wary that escalating tariffs imposed by the U.S. and China could imperil global economic growth and weaken energy demand. Trade talks between the nations wrapped up Thursday without major progress, setting the stage for further escalation of the conflict between the world’s two largest economies.

Other oil-market news:

Kazakhstan’s Kashagan oil production declined about 30 percent amid planned maintenance that began last week, said the country’s Deputy Energy Minister Magzum Mirzagaliyev. China’s Cnooc Ltd. said it plans to boost spending through the remainder of this year to meet investment targets as the resurgence in crude prices pushed its half-year profit to the highest since 2014.