Crude oil futures were higher during mid-morning trade in Asia Friday as market participants were looking ahead for tropical storm Barry to hit the northern coast of Mexico, while geopolitical tensions elsewhere continued to provide price support.
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At 10:44 am Singapore time (0244 GMT), front-month ICE Brent September futures was up 42 cents/b (0.63%) from Thursday's settle at $66.94/b, while the NYMEX August light sweet crude futures contract was 37 cents/b (0.61%) higher at $60.57/b.
US offshore oil and gas drillers continued to shut production Thursday as Tropical Storm Barry develops in the northern Gulf of Mexico.
The US Department of Interior's Bureau of Safety and Environmental Enforcement said Thursday that Gulf of Mexico drillers had shuttered 53% of oil production and 45% of natural gas output ahead of the storm.
The National Hurricane Center expects Barry to reach hurricane strength late Friday or early Saturday and make landfall in Louisiana.
"Brent crude oil prices extended its gains as storms in the Gulf of Mexico halted production of oil and US oil inventories continued to recede more than expected, " ANZ analysts said in a note.
The US Energy Information Administration on Wednesday had reported that US crude stocks for the week ended July 5 had fallen by 9.5 million barrels, a 12-week low.
Meanwhile a diplomatic row between Iran and the UK involving oil tankers escalated Thursday after a stand-off in the world's largest oil shipping artery raised fresh concerns over global energy security, which have also spiked insurance costs for ships transiting the Middle East.
The UK government said Thursday that the British Heritage, was approached by three Iranian vessels in the Persian Gulf attempting to impede the vessel. The Iranian ships turned back, however, after a British Navy frigate accompanying the tanker intervened.
"HMS Montrose was forced to position herself between the Iranian vessels and British Heritage and issue verbal warnings to the Iranian vessels, which then turned away," the spokesman added. "We are concerned by this action and continue to urge the Iranian authorities to de-escalate the situation in the region."
Iran's Revolutionary Guards denied responsibility, according to a statement carried by Fars news agency.
"Tensions in the Middle East are not showing any signs of easing. The British Navy intervened to stop Iran from blocking oil tankers leaving from the Persian Gulf," the ANZ analysts said.
Elsewhere, OPEC analysis group on Thursday projected demand for OPEC crude in 2020 to fall to 29.27 million b/d, down 1.34 million b/d from the 2019 projection.
The call on OPEC crude denotes the threshold of how much oil the bloc can produce and still prevent a price-dampening accumulation of barrels going into storage.
This bearish outlook prevented crude prices from rising further, analysts said.
As of 0244 GMT, the US Dollar Index was down 0.18% at 96.57.
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