Oil steadies as U.S. supply concerns ease, Iran tension unresolved
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LONDON (Reuters) – Oil prices steadied on Tuesday as a resumption of output in the Gulf of Mexico after Hurricane Barry and a boom in U.S. supply due to shale oil countered tensions in the Middle East.
FILE PHOTO: Oil pumps are seen after sunset outside Vaudoy-en-Brie, near Paris, France November 14, 2018. REUTERS/Christian Hartmann
Prices remained under pressure as data on Monday showed that second-quarter economic growth in China slowed to 6.2% from a year earlier, the weakest pace in at least 27 years.
Brent crude futures LCOc1 were up 4 cents at $66.52 a barrel by 0852 GMT. The international benchmark lost 24 cents, or 0.4%, on Monday.
West Texas Intermediate crude futures CLc1 rose by 1 cent to $59.59 a barrel. The U.S. benchmark fell about 1% in the previous session.
U.S. oil companies on Monday began restoring some of the nearly 74% of production that was shut at Gulf of Mexico platforms ahead of Hurricane Barry.
“Crude oil is having a quiet day today after giving back some of last week’s gains,” Saxo Bank commodity strategist Ole Hansen said.
“U.S. output from the Gulf looks set to increase and … Barry failed to hit refinery assets along the coast.”
Workers were returning to the more than 280 production platforms that had been evacuated. However, it can still take several days for full production to resume.
“You could almost hear the big sigh of relief from oil producers and refiners in the region as the storm passed without causing significant damage,” PVM analyst Tamas Varga said.
The market was also weighed down by signs of further increases in output from the United States, which has ridden a wave of shale oil production to become the world’s biggest crude producer, ahead of Russia and Saudi Arabia.
U.S. oil output from seven major shale formations is expected to rise by about 49,000 barrels per day in August, to a record 8.55 million bpd, the U.S. Energy Information Administration said.
Rising U.S. output will undermine efforts by Russia and Saudi Arabia to reduce global oil inventories by convincing suppliers in the Organization of the Petroleum Exporting Countries and outside OPEC to cut production.
The global supplier group, known as OPEC+, agreed this month to extend production cuts for another nine months.
Market activity has started to slow as it tends to do in July and August, the peak European and U.S. holiday season, Hansen said.
Tension between the United States and Iran over Tehran’s nuclear program kept the market nervous given the potential for a price spike should the situation deteriorate.
“The Iranian tension … still makes any oil bear careful,” Varga said.
For a graphic on U.S. Oil drilling and storage, see: tmsnrt.rs/2Ino7XU
Additional reporting by Aaron Sheldrick in Tokyo; Editing by Dale Hudson