LONDON: Brent crude oil edged towards $110 a barrel yesterday as a tropical storm approached the oil-producing regions around the US Gulf, but concerns over a prolonged US government shutdown and reduced tension over Iran kept prices in check.
Energy companies including Exxon and BHP Billiton started shutting in offshore oil production in the Gulf of Mexico on Thursday ahead of Tropical Storm Karen’s arrival, providing support for oil.
The US shutdown, which was triggered by a row over state spending and is now in its fourth day, is expected to hurt demand in the world’s largest oil consumer, as nearly one million government workers have been forced to take unpaid leave. Brent crude rose 67 cents to $109.67 by 1350 GMT, after settling 19 cents lower in the previous session.
US oil rose 70 cents to $104.01, after falling 79 cents on Thursday. Both benchmarks were set to end the week slightly higher, following declines in the previous three weeks. “The Brent price is pretty stable,” said Carsten Fritsch, senior oil and commodities analyst at Commerzbank in Frankfurt.
“It’s being pulled down by the shutdown, declining geopolitical risks and positive inventory data, ... but the storm in the Gulf of Mexico is preventing a price drop.” Some energy companies in the US Gulf have halted production and evacuated rig workers, disrupting crude supplies.
“The storm in the US Gulf will certainly lead to a reduction in loadings of crude oil, which may create some price tightness,” said Gareth Lewis-Davies, senior energy strategist at BNP Paribas.
The National Hurricane Centre said the storm was expected to be at or near hurricane strength on Friday or Saturday and that it could reach the US Gulf Coast between Louisiana and the Florida Panhandle over the weekend.