Crude rose as storm Michael strengthened and shut some U.S. oil output, while the International Energy Agency called on producers to pump more as the market is “entering the red zone.”
Futures in New York rose 0.6 percent. Michael, currently a category 1 storm, is strengthening as it heads toward Florida after shutting about 19 percent of oil production in the Gulf of Mexico. The IEA’s Executive Director Fatih Birol urged crude producers in the Middle East and elsewhere to do more in order to avoid a “ challenging” end to the year.
Crude has gained more than 20 percent this year as sanctions on Iran, Venezuela’s slumping oil industry and pipeline bottlenecks in the biggest American shale regions crimp supply. That’s currently surpassing concerns that surging prices could reduce consumption in some countries, adding to demand risks as U.S.-China trade tensions continue to flare.
“The oil market mood is exceptionally bullish, with fears growing that the U.S. demands for an Iran oil embargo could cause a significant supply shortfall,” said Carsten Menke, an analyst at Bank Julius Baer & Co.
West Texas Intermediate for November delivery was 43 cents higher at $74.72 a barrel on the New York Mercantile Exchange at 8:49 a.m. local time. The contract lost 5 cents to $74.29 a barrel on Monday. Total volume traded Tuesday was 14 percent below the 100-day average.
Brent for December settlement added 57 cents at $84.48 a barrel on the London-based ICE Futures Europe exchange. The global benchmark crude traded at a $9.88 premium to WTI for the same month.
The IEA’s Birol made a direct appeal to the Organization of Petroleum Exporting Countries and other major oil producers to boost production. He has welcomed efforts by Saudi Arabia to increase output, but believes market tightness is likely to persist.
“Demand is still very strong, and we’ve been losing oil from Venezuela in big amounts, and also Iran is going down,” Birol said in a Bloomberg TV interview.
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