Oil traded near $60 a barrel as U.S. crude inventories were forecast to fall for a fifth week, while some production in the Gulf of Mexico is returning as a tropical storm eased.
Futures were up 0.6% after sliding 1.1% on Monday. Oil producers and refiners along the coast are restoring operations after storm Barry was downgraded, with about 69% of crude output in the Gulf still shuttered, down from a peak of 73% on Sunday.
American crude inventories declined by 2.75 million barrels, according to a Bloomberg survey.
Oil has rallied about 16% since mid-June on shrinking American stockpiles, rising tensions with Iran and extended OPEC cuts. Geopolitical risk heightened Tuesday as the U.S. said it was probing the fate of a small Emirati tanker that entered Iranian waters.
Still, concerns about expanding supply and weakening demand continue to dent the outlook after the International Energy Agency said Friday that global inventories unexpectedly swelled in the first half of this year.
“OPEC needs to keep a lid on production and potentially cut more if it’s going to continue to manage prices around the $70 a barrel mark,” Sanford C. Bernstein analyst Oswald Clint said in a Bloomberg TV interview. “In the short-term, given that we’re in peak driving season, we’re going to continue to see inventories draw.”
August West Texas Intermediate rose by 33 cents to $59.91 a barrel on the New York Mercantile Exchange as of 8:59 a.m. in New York. Brent for September settlement rose 26 cents to $66.74 a barrel on the ICE Futures Europe Exchange and traded at a premium of $6.71 to WTI for the same month.
Royal Dutch Shell Plc and ConocoPhillips are among companies seeking to restore output at offshore platforms in the Gulf of Mexico now that weather conditions have improved after Barry made landfall. The region accounts for 16% of total U.S. crude oil production, according to the Energy Department.
© 2019 Bloomberg L.P.