LONDON, July 26 — Oil in London headed to the highest close in almost two weeks after an attack on tankers belonging to top exporter Saudi Arabia heightened uncertainties over supplies, while US crude and gasoline stockpiles plunged.
Brent crude futures advanced as much as 1.1 per cent, on course for a third daily gain. Two Saudi vessels were attacked by Yemeni Houthi militia members, leading Saudi Arabia to temporarily stop sending oil shipments via the Bab el-Mandeb Strait.
In the US, crude inventories dropped to the lowest since 2015 last week, while gasoline supplies slid for a fourth week.
The drop in stockpiles and concerns over supplies are helping crude recover some of its recent losses that were driven by an escalating trade spat between the US and China. While Opec and its allies last month agreed to pump more, speculation is swirling over how Iran’s exports will be affected by President Donald Trump’s decision to renew sanctions on the Persian Gulf state.
The Saudis’ temporary halt on shipments is “short-term bullish,” said Stephen Innes, Singapore-based head of trading for Asia Pacific region at Oanda Corp. “I’m not looking at it as a long-drawn process. But in the meantime, if there’s any uncertainty or disruption, prices may pop up by a few cents.”
Brent for September settlement added 44 cents to trade at US$74.37 (RM301.21) a barrel on the London-based ICE Futures Europe exchange as of 7.37am in London. Total volume traded was 63 per cent above the 100-day average. The global benchmark crude traded at a US$5.02 premium to West Texas Intermediate.
WTI crude for September delivery rose as much as 44 cents to US$69.74 a barrel on the New York Mercantile Exchange and traded 4 cents cent higher at US$69.34. Prices gained 1.1 per cent yesterday.
Futures for September delivery gained less than 0.1 per cent to trade at 503.3 yuan a barrel on the Shanghai International Energy Exchange, after rising 1.7 per cent yesterday.
Tankers attacked
In the Middle East, Saudi Arabia immediately suspended oil shipments through the Bab el-Mandeb Strait after two vessels, each carrying two million barrels of crude belonging to the Saudi National Shipping Co., were attacked by Iran-backed Houthi members.
Investors have been trying to gauge the impact from the closure as the strait is one of the world’s key shipping lanes for crude and other petroleum products. A full closure would force tankers sailing from Saudi Arabia, Kuwait, Iraq, and the United Arab Emirates “around the southern tip of Africa, which would add to transit time and cost,” according to the US Energy Information Administration.
Meanwhile, US crude inventories dropped by 6.15 million barrels last week to 404.9 million barrels, the lowest level since February 2015, according to the EIA. Stockpiles at key storage hub Cushing, Oklahoma, slid for a 10th week, while gasoline stocks declined for a fourth week.
Other oil-market news
US crude oil exports surged by the most ever last week, according to the EIA. Suncor Energy Inc trimmed the top end of its production target for the year as it works to bring its key Syncrude facility back online after a power outage brought the plant down last month. — Bloomberg
