(Frafurt) — Oil traded near a two-week high in New York amid signs of a further drop in US crude stockpiles and ongoing concerns that political friction in the Arabian Gulf could disrupt exports.
Futures rose as much as 0.9% in New York after gaining 3.9% in the past four sessions. American crude inventories dropped by 6.02 million barrels last week, according to an industry report. If confirmed by government data on Wednesday, it will be a seventh weekly decline. BP is avoiding sending ships through the Strait of Hormuz, Chief Executive Officer Bob Dudley said Tuesday.
Oil is little changed this month after swinging between gains and losses as global growth concerns competed with escalating tensions in the Middle East. While optimism that the Federal Reserve will cut interest rates is brightening the outlook for oil demand, a new round of trade talks between China and the US showed few signs of resolving their differences.
“Supply fundamentals still remain supportive of oil prices, and are tightening given the effectiveness of US sanctions that have reduced Iran’s crude oil exports to a trickle,” said Harry Tchilinguirian, head of commodity markets strategy at BNP Paribas SA. But for “oil to move higher, the market is going to need a positive economic catalyst.”
West Texas Intermediate for September delivery rose as much as 52 cents to $58.57 a barrel on the New York Mercantile Exchange, and traded at $58.35 as of 11:31am. London time. It’s up for a fifth day, after climbing 2.1% on Tuesday, the biggest gain since July 10.
Brent crude for September, which expires Wednesday, added 40 cents to $65.12 a barrel on the ICE Futures Europe exchange. It gained 1.6% to close at $64.72 on Tuesday. The more-active October contract was at $65.03, up 40 cents. The September contract traded at a $6.85 premium to WTI.
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A steady decline in US crude inventories has alleviated some demand concerns. American stockpiles have dropped for six weeks through July 19, the longest run of losses since January 2018. Government data is forecast to show supplies fell by 2.75 million barrels, according to a Bloomberg survey.
Tensions have escalated in the Arabian Gulf in recent months after a series of attacks on tankers and drones, while Iran is being subjected to US sanctions that have squeezed its oil exports. The Arabian Gulf nation has reached a deal with Russia to hold a joint military drill in the Indian Ocean by March 2020, semi-official Fars News reported, citing the commander of the Iranian navy.