The U.S. crude benchmark marked its highest level since May 23 in the previous session at $60.94 as Tropical Storm Barry barrels toward Louisiana and could hit the coastline as a hurricane by Saturday, with almost 20% of U.S. oil refining capacity potentially in its path.
Gulf of Mexico operators have shut-in 1.01 million barrels a day of crude production because of the storm, this represents around 53% of the region’s production.
U.S. crude oil inventories have decreased for four consecutive weeks, with stocks fell 9.5 million barrels in the week to July 5 according to the EIA. This is no doubt was caused in part by the bad weather and it wouldn’t be too hard to imagine a drop in stocks across the barrel next week after the production shutdown this week.
The OPEC monthly report doesn’t make for too bullish reading as ‘Demand for OPEC crude for 2019 was revised up by 0.1 mb/d from the previous report to stand at 30.6 mb/d, 1.0 mb/d lower than the 2018 level’, so once these surprise factors of Iran and Trump are resolved there will be intense scrutiny of this and an inevitable ‘fall on fact’ moment.
Keep an eye on the situation in Iran, as things could escalate pretty quickly especially if the U.S. get involved as well, using their military to escort ships through the Strait of Hormuz.