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Oil prices rise amid Gulf of Mexico storm, Middle East tensions

13 July 2019

Oil prices jumped on Wednesday as a larger-than-expected decline in US crude stockpiles and a potential tropical cyclone in the Gulf of Mexico added to concerns over tightening market.

Major oil firms began evacuating and halting production in the Gulf of Mexico ahead of the storm, which is forecast to become a hurricane by the weekend.

Tensions in West Asia worsened today after gunboats of the Iranian Revolutionary Guards asked a British oil tanker to stop in Iranian waters, but later withdrew following warning from a British warship warned, U.S. officials said.

Nevertheless, oil prices are down on the day, with the price of WTI crude falling slightly by $0.05 per barrel or 0.08% at $60.38 per barrel at 3:30pm EST. The worldwide benchmark settled down 0.7 per cent on Thursday after hitting its highest since May 30 at $67.52 a barrel.

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Oil prices were also supported by a fall in the dollar after Federal Reserve Chairman Jerome Powell bolstered expectations for US interest rate cuts.

West Texas Intermediate crude for August delivery gained 12 cents to $60.55 a barrel on the New York Mercantile Exchange as of 8:52 a.m.in Singapore after rising as much as 20 cents earlier.

United States output is rising again after a brief drop from record levels, according to the EIA.

Opec gave its first 2020 forecasts in a monthly report Thursday, saying the world would need 29.27 million barrels per day (Mmbpd) of crude from its 14 members next year, down 1.34 Mmbpd from this year. The contract closed on the ideal stage since Might 22 on Wednesday. "Non-OPEC oil supply is forecast to grow by 2.4 mb/d in 2020, higher than in the current year".

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Brent for September settlement slipped 4 cents to $66.97 a barrel on the ICE Futures Europe Exchange.

U.S. oil producers on Wednesday also cut almost a third of their output in the Gulf of Mexico ahead of what could be one of the first major storms of the Atlantic hurricane season. A day after Iran warned Britain would face "consequences" over the seizure of an Iranian oil tanker, three Iranian vessels tried to block passage of a British ship operated by BP through the Strait of Hormuz, the British government said.

According to the Weekly Petroleum Status Report, U.S. commercial crude oil inventories, excluding those in the Strategic Petroleum Reserve, decreased by 9.5 million barrels from the previous week to 459.0 million barrels. That in comparison with the median estimate in a Bloomberg survey for a 2.9 million-barrel decline.

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Oil prices rise amid Gulf of Mexico storm, Middle East tensions