Oil nears $80 amid tropical storm threat to US Gulf assets
Threat to US production from storm forecast to strike the Gulf Coast and rising OPEC crude output hit sentiment
New York: Futures advanced as much as 2.3% on Tuesday. Anadarko Petroleum Corp. stopped production and removed all personnel from two Gulf of Mexico platforms as Gordon is forecast to strike the coast as a hurricane on Tuesday. Meanwhile, strength in the dollar is keeping crude’s rally limited. The Bloomberg Dollar Spot Index rose as much as 0.7% on Tuesday.
West Texas Intermediate for October delivery added 52 cents to $70.32 a barrel at 10:23 a.m. on the New York Mercantile Exchange. Monday trades will be booked Tuesday because of the US holiday. Average volume traded Tuesday was about 51 percent above the 100-day average.
Brent for November settlement climbed 50 cents to $78.65 a barrel on the ICE Futures Europe exchange. The global benchmark crude traded at a $8.66 premium to WTI for the same month.
“The strengthening of the hurricane and shutting of some platforms helped prices,” said John Kilduff, a partner at New York-based hedge fund Again Capital LLC. While the storm doesn’t appear to be too much of a threat to inland refineries, oil “is still getting some support from it.”
Oil posted a 1.5% gain in August in New York and the global benchmark Brent also rose as investors focus on the impact Iranian sanctions have on global crude markets. Yet, Iran will keep selling oil in spite of an expected resumption of sanctions on the country’s crude shipments, President Hassan Rouhani said. Traders are also watching for whether OPEC and its allies will fill any supply gaps as a result, as OPEC crude production rose in August to the highest level this year.
“We’ve seen increasing reports about the fall in Iranian exports already starting to be visible to the market,” Kilduff said. “Those are barrels that are going to be sorely missed.”
Gordon, with top winds of 65 miles (105 kilometers) per hour, was about 190 miles east-southeast of the mouth of Mississippi River, according to a National Hurricane Center advisory at 8 a.m. New York time. On Monday, New Orleans Mayor LaToya Cantrell declared a state of emergency for the city to prepare for Gordon, according to an emailed statement from her office.
So far, operations at US refineries in the storm’s path have not been affected.
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