Oil prices advanced for the first week in two months amid signs of tighter supply from the North Sea to the Middle East.
Futures in New York rose 4.4 percent for the week, ending the longest streak of losses since 2015.
US crude stockpiles last week dropped by more than twice what analysts expected, while strikes at Total SA’s fields in the North Sea could curb supply.
Iran’s exports are set to decline sharply as renewed US sanctions take effect, analysts at FGE and Cowen & Co said, while China International United Petroleum & Chemical Corp (中國國際石化聯合) is said to be resuming purchases of US oil again.
“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 6 percent since sinking in the middle of this month to the lowest in almost two months.
The supply threats are partly offsetting concern that the trade dispute between the US and China, along with the risk of contagion from Turkey’s economic crisis, could hurt global oil demand.
“We saw a quick correction following concerns of demand growth and escalation of trade tensions,” Tradition Energy market research manager Gene McGillian said. “But, when you step back and look at inventories, they’re at multiyear lows and we continue to see signs that global demand growth is strong.”
West Texas Intermediate (WTI) crude for October delivery rose US$0.89 to settle at US$68.72 a barrel on the New York Mercantile Exchange. The contract rose 4.4 from last week. Total volume traded was about 30 percent below the 100-day average.
Brent for October settlement increased US$1.09 to settle at US$75.82 a barrel on the London-based ICE Futures Europe exchange. The contract is up 5.5 percent on the week.
The global benchmark crude settled at US$7.10 premium to WTI.
The North Sea industry faces further industrial action starting next month.
The Alwyn, Dunbar and Elgin fields operated by Total are to be affected by a series of 12-hour strikes after talks on pay and working hours broke down, the UK’s Unite union said on Thursday.
US oil rigs fell by nine this week to 860, according to data from oilfield service provider Baker Hughes Inc, the steepest weekly drop since May 2016.
US government data released on Wednesday showed that nation’s crude stockpiles last week declined by 5.84 million barrels.
Industry consultant FGE predicts that Iranian oil exports will drop below 1 million barrels a day by the middle of next year after the US in early November reimposes sanctions targeting its crude.
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 Thursday.
Still, investors remain wary that escalating tariffs imposed by the US and China could imperil global economic growth and weaken energy demand.
Trade talks between the nations wrapped up on Thursday without major progress, setting the stage for further escalation of the conflict between the world’s two largest economies.
Money managers cut their bullish ICE Brent crude oil bets for the week ended that ended on Tuesday, with net-longs at the lowest in 13 months, ICE Futures Europe data showed.
Oil market news:
‧ Colombia’s state-owned oil company Ecopetrol SA plans to expand its oil and gas reserves through acquisitions, while also increasing its presence in the US.
‧ Japanese refiner JXTG Nippon Oil & Energy is suspending marine shipments of oil products from several refineries after Typhoon Cimaron struck western Japan, the company said.
‧ China’s CNOOC Ltd (中國海洋石油) 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.
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