Oil prices increased yesterday as US oil producers in the Gulf of Mexico cut their production by more than half due to a tropical storm, while tensions continue to rise in the Middle East.
US crude stocks have fallen for four weeks, while prices have been supported by oil companies' production cutting in the Gulf of Mexico due to tropical storm "Barry".
Companies have stopped the production of more than 1 million barrels a day (bpd) – equivalent to 53 per cent of the region's production – while the storm is heading towards the coast of US state Louisiana, where it could arrive today.
The market also remains concerned about tensions between Iran and the West, which have seen a number of oil tankers hit in the Arabian Gulf. Iran said yesterday that the UK is playing a "dangerous game", after an Iranian tanker was seized last week on suspicion that it was violating European sanctions by transporting oil to Syria.
However, the International Energy Agency's expectations of a global oil surplus are dampening gains. The Agency yesterday predicted that the rise in US oil production would outweigh global demand, leading to a large accumulation of stocks around the world in the next nine months.
The Organisation of the Petroleum Exporting Countries (OPEC) on Thursday expected the return of registering a surplus of supplies in the next year, despite an OPEC-led deal to curb supply.
By 12:15 GMT, Brent crude futures had risen by 24 cents to reach $66.76 per barrel, after hitting a session high of $67.29 per barrel. Meanwhile WTI futures rose by 6 cents to hit $60.26 per barrel, after hitting a session high of $60.74 per baller.
Brent prices have risen 4.5 per cent since the beginning of the week, while WTI crude oil prices have risen by 5.5 per cent. It is noted that the value of the two crude oils fell last week.
Oil Analyst at PVM Oil Associates, Stephen Brennock, explained "it is appropriate to say that OPEC's best plans to restore balance to the oil market have so far failed".
"The rally of oil producers has led efforts to curb supplies since the beginning of 2019, but failed to get rid of the oversupply surplus," he added.