Oil pared a weekly loss as investor focus shifted from broader market turmoil spurred by a plunge in U.S. equities to looming shortages from Iran’s dwindling exports.
Futures in New York rose 0.7 percent, trimming the weekly drop to 3.9 percent. The International Energy Agency, while cutting estimates for global oil-demand growth for this year and next, warned that prices will remain high as spare crude supplies diminish.
Oil has retreated more than 6 percent after reaching a four-year high earlier this month. Commodities were hit by the U.S. stock sell-off this week as risk aversion spread through global markets. Still, with impending U.S. sanctions on Iran set to cut the OPEC producer’s oil exports, traders continue to worry about whether the Organization of Petroleum Exporting Countries will be able to offset potential production losses.
“With the uncertainty about Iran sanctions” and “ongoing concerns about the situation in Venezuela, we are running very, very close to maximum capacity,” Neil Atkinson, head of the IEA’s oil industry and markets division, said in a Bloomberg television interview from Paris. “The industry’s running flat out, and because it’s flat out that is likely to mean that prices will be supported at relatively high levels.”
West Texas Intermediate for November delivery was at $71.45 a barrel on the New York Mercantile Exchange at 11:06 a.m. London time, up 48 cents. WTI fell $2.20 to $70.97 on Thursday, and is set for the biggest weekly decline since July. Total volume traded was about 11 percent above the 100-day average.
Brent for December settlement advanced 36 cents to $80.62 a barrel on the London-based ICE Futures Europe exchange. The global benchmark crude declined $2.83 on Thursday, and is down 4.2 percent for the week. It traded at a $9.31 premium to WTI for the same month.
Equities staged a recovery on Friday, with the Stoxx Europe 600 index gaining for the first time in three days, though still on course for its worst week since February. The S&P 500 has fallen for the past six days.
As the American stock sell-off soured sentiment across markets including raw materials on Thursday, a measure of oil-price volatility surged to the highest level since July. The same day, the Bloomberg Commodity Index had its first back-to-back drop in three weeks as oil and aluminum prices plunged, and is on course for the first weekly decline in four weeks.
In the U.S., the Energy Information Administration said nationwide crude inventories rose by 5.99 million barrels last week, more than the 2.8 million-barrel increase predicted in a Bloomberg survey. Inventories at the storage hub in Cushing, Oklahoma, gained for a third straight week, while stockpiles in the Strategic Petroleum Reserve fell by 1.31 million barrels, the EIA said.
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