Oil traded near $70 a barrel as investors assessed the threat to U.S. production from a storm that is forecast to strike the Gulf Coast as well as rising OPEC crude output.
Futures in New York gained as much as 0.6 percent from Friday’s close. There was no settlement Monday because of the U.S. Labor Day holiday. Anadarko Petroleum Corp. evacuated workers and shut production at two Gulf of Mexico platforms as Tropical Storm Gordon approached the mouth of the Mississippi River.
Meanwhile, output from the Organization of Petroleum Exporting Countries in August rose to the highest level this year.
Oil has rebounded almost 8 percent from the lows of August as buyers of Iranian crude have started shunning shipments from the Persian Gulf nation even before renewed U.S. sanctions take full effect in November. Investors are watching whether OPEC and its allies including Russia will boost production to fill any potential deficit.
Meanwhile, the storm nearing the American Gulf Coast is also raising concerns that supply may be disrupted.
Also read: U.S. Throttles Iranian Oil Flows to Buyers Who Vowed Resistance
“Bullish sentiment is slightly prevailing even though reports point to an increase in OPEC output while U.S. production remains at high levels,” said Satoru Yoshida, a commodity analyst at Rakuten Securities Inc. in Tokyo. “As we are in the middle of hurricane season, oil prices can easily rise.”
West Texas Intermediate for October delivery rose as much as 41 cents to $70.21 a barrel on the New York Mercantile Exchange from Friday’s close, and traded at $70.06 at 1:56 p.m. in Tokyo. All trades Monday will be booked Tuesday due to the U.S. holiday. Total volume traded was 340 percent above the 100-day average.
Brent futures for November settlement traded at $78.08 a barrel on the ICE Futures Europe exchange, down 7 cents. The contract climbed 51 cents to $78.15 on Monday. The global benchmark crude traded at an $8.43 premium to WTI for the same month.
December futures in Shanghai rose 0.1 percent to 521.7 yuan a barrel. The contract dropped 0.5 percent on Monday.
OPEC’s production rose in August as a recovery in Libyan output helped offset a cut in Iranian exports. The group’s 15 members, which now include the Republic of Congo, collectively produced 32.74 million barrels a day last month, an increase of 420,000 barrels a day from July, according to a Bloomberg News survey of analysts, oil companies and ship-tracking data. Gordon is expected to grow into a hurricane before coming ashore early Wednesday.
The Louisiana Offshore Oil Port said it’s watching the storm closely, but there are currently no disruptions. Barclays Plc raised its 2020 Brent crude forecast to $75 a barrel from $55, which it predicted in July last year. The bank also increased its 2025 estimate to $80 a barrel from $70, according to a report by analyst Michael Cohen.
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