Oil holds at seven-week high on gulf storm, US stockpiles draw

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TOKYO (July 11): Oil held gains after closing at a seven-week high as output in the Gulf of Mexico was shut ahead of a potential hurricane and U.S. crude inventories shrunk more than expected.

Futures edged higher in New York after climbing 4.5% on Wednesday to close above $60 a barrel for the first time since May. Major producers from BP Plc to Chevron Corp. have evacuated crews from offshore installations and almost one-third of Gulf crude output has been halted. A fourth weekly draw in American stockpiles and Federal Reserve Chairman Jerome Powell’s signal the central bank is preparing to cut interest rates added to the bullishness.

Oil has been rallying since the middle of last week as tensions surrounding Iran stoke concerns crude flows may be disrupted. President Donald Trump vowed Wednesday to impose more sanctions on the Islamic Republic and accused it of violating the nuclear accord that he withdrew from last year, while French President Emmanuel Macron is trying to salvage the deal. Asian stocks opened higher and the dollar fell following Powell’s comments.

“Oil markets are being supported by factors peculiar to the summertime -- hurricanes and high gasoline demand,” said Satoru Yoshida, a commodities analyst at Rakuten Securities Inc. in Tokyo. Expectations for a U.S. interest-rate cut and the tension in the Middle East are also helping, he said.

West Texas Intermediate crude for August delivery gained 12 cents to $60.55 a barrel on the New York Mercantile Exchange as of 8:52 a.m. in Singapore after rising as much as 20 cents earlier. The contract closed at the highest level since May 22 on Wednesday.

Brent for September settlement slipped 4 cents to $66.97 a barrel on the ICE Futures Europe Exchange. It climbed 4.4% to $67.01 on Wednesday, the highest close since May 29. The global benchmark crude traded at a $6.33 premium to WTI for the same month.