That focus softened the potentially negative price implications from an OPEC update that cut expectations for 2020 cartel demand, in part because of competing oil from the U.S.
Futures rallied Wednesday to settle at their highest since May, with U.S. prices up a fifth straight session. Prices got a boost from data showing a fourth consecutive weekly decline in U.S. crude inventories, persistent Iran tensions and dovish comments from Federal Reserve Chairman Jerome Powell that pressured the dollar, impacting dollar-priced commodities. Powell returns to Capitol Hill Thursday and a U.S. interest-rate decision looms at month’s end.
In recent trading, August West Texas Intermediate crude CLQ19, +0.38% was up 24 cents, or 0.4%, at $60.66 a barrel on the New York Mercantile Exchange. It wrapped Wednesday at $60.43, the highest settlement for front-month WTI prices since May 22.
International benchmark September Brent BRNU19, +0.19% rose 26 cents, or 0.4%, at $67.27 a barrel on ICE Futures Europe. Its finish at $67.01 Wednesday was the highest since May 29.
The market’s key short-term focus is a tropical storm, expected to become a depression later Thursday, over the North-Central Gulf of Mexico, according to the National Hurricane Center.
By Wednesday, a total of nearly 32% of oil production in the Gulf of Mexico and almost 18% of natural-gas production were shut down as a precaution, according to the Bureau of Safety and Environmental Enforcement.
As for the demand picture, OPEC said in a Thursday report it expects world demand for its crude will decline next year as rivals, including the U.S., pump more. It’s a downgraded view that comes even as the cartel and its allies have extended a strategy to restrain supplies by another nine months.
The Organization of Petroleum Exporting Countries says demand for its crude is expected to average 29.3 million barrels per day in 2020, down by around 1.3 mb/d from 2019.
OPEC has cut its 2019 oil-production growth forecast for its peers, including Russia, now expecting a smaller rise of 2.05 million barrels a day. Non-OPEC oil supply is forecast to grow by 2.4 mb/d in 2020, higher than in the current year.
The Energy Information Administration on Wednesday reported that U.S. crude supplies declined by 9.5 million barrels for the week ended July 5. They were expected to fall by 2.1 million barrels, according to analysts at IHS Markit.
“The [supply] situation could be even tighter next week, as Gulf of Mexico is hit by a storm, production ceases and personnel has being evacuated from the area,” said Peter Iosif, market analyst with IronFX Global. “In other news, Middle East tensions rose... as Iranians tried unsuccessfully to seize a British tanker in the Persian Gulf. U.S. President Trump tweeted a new stark warning against Iran, intensifying the situation further. We could see oil prices continue to rise, as the supply side seems to remain tight.”
The EIA data also showed that gasoline inventories were also down by 1.5 million barrels, while distillate stockpiles climbed by 3.7 million barrels last week. IHS Markit had shown expectations for a supply decline of 400,000 barrels for gasoline and an increase of 1.5 million barrels for distillates.
On Nymex, August gasoline US:RBN19 rose 1 cent, or 0.3%, to $2.0103 a gallon, while August heating oil US:HON19 added 2 cents, or 0.8%, to $2.0062 a gallon.
Rounding out energy trading, August natural gas US:NGN19 added 1 cent, or 0.6%, to $2.458 per million British thermal units.
