Oil Rises on Supply Risks After Longest Losing Run Since 2015
(Bloomberg) -- 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 were up 4.3 percent for the week, ending the longest streak of losses since 2015. U.S. crude stockpiles dropped by more than twice what analysts expected last week, while strikes at Total SA’s fields in the North Sea could curb supply. Iran’s exports are set to decline sharply as renewed U.S. sanctions take effect, analysts at FGE and Cowen & Co. said, while Unipec is said to be resuming purchases of U.S. 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 mid-August to the lowest in almost two months. The supply threats are partly offsetting concern that the trade dispute between the U.S. 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,” said Gene McGillian, manager of market research at Tradition Energy. “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 crude for October delivery rose 89 cents to settle at $68.72 a barrel on the New York Mercantile Exchange. Total volume traded was about 30 percent below the 100-day average.
Brent for October settlement increased $1.09 to settle at $75.82 a barrel on the London-based ICE Futures Europe exchange. The contract is up more than 5 percent on the week. The global benchmark crude settled at $7.10 premium to WTI.