Oil traded near $71 a barrel in New York as Tropical Storm Gordon forces evacuations at fields along the U.S. Gulf Coast and threatens supply.
Futures rose as much as 2.3 percent from Friday, skipping Monday because of the U.S. Labor Day holiday. Anadarko Petroleum Corp. stopped production and removed all personnel from two Gulf of Mexico platforms as Gordon neared the mouth of the Mississippi River. The risk to supply pushed up prices despite data showing rising OPEC output.
A hurricane warning has been posted for the Gulf Coast from eastern Louisiana to the Florida-Alabama state line, raising concerns that work at more oil installations may be disrupted. The region produces about 17 percent of U.S. crude, according to the Energy Information Administration, while onshore plants account for about 45 percent of the country’s refining capacity.
“The U.S. hurricane season has been very quiet so far, but as we approach the annual peak it may attract increased attention and, with that, some underlying support for crude oil,” said Ole Sloth Hansen, head of commodity strategy at Saxo Bank A/S.
West Texas Intermediate for October delivery rose as much as $1.60 to $71.40 a barrel on the New York Mercantile Exchange, and was at $71.22 as of 7:46 a.m. local time. Monday trades will be booked Tuesday because of the U.S. holiday. Average volume traded Tuesday was more than double the 100-day average.
Brent for November settlement advanced $1.24 to $79.39 a barrel on the ICE Futures Europe exchange, after climbing 51 cents on Monday. The global benchmark crude traded at an $8.58 premium to WTI for the same month.
Oil has rebounded about 9 percent from the lows of August as buyers of Iranian crude start to shun shipments from the Persian Gulf nation even before renewed U.S. sanctions take full effect in November. India is said to be mulling a 50 percent cut in purchases, while shipments to South Korea plunged 40 percent in July and Europe’s imports have dropped by 45 percent since May.
“As sanctions directly targeting Iranian oil will be imposed on Nov. 4, increasing worries of disruptions to global crude supply are allegedly affecting the crude price as well,” Global Risk Management wrote in a research note.
Traders are closely watching for signs the Organization of Petroleum Exporting Countries and its allies will fill any potential deficit. OPEC produced 32.74 million barrels a day last month, an increase of 420,000 a day from July, according to a Bloomberg News survey of analysts, oil companies and ship-tracking data. Russia maintained output near a post-Soviet record.
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With Tropical Storm Gordon expected to grow into a hurricane before coming ashore early Wednesday, the Louisiana Offshore Oil Port said it’s watching the storm closely, but there are currently no disruptions. Exxon Mobil Corp. said a blockade of its Nigerian facilities may affect oil output. Kazakhstan’s crude and condensate production sank in August as maintenance work at key fields hit flows, government data compiled by Bloomberg show. BNP Paribas SA trimmed its 2018 Brent and WTI forecast by $4 a barrel each to $68 and $74 respectively as it expects the dollar “to remain stronger for longer”, analyst Harry Tchilinguirian said in a report.