Oil traded near $70 a barrel as investors assessed the threat to US production from a storm that is forecast to strike the Gulf Coast as well as rising Opec crude output.
Futures in New York gained as much as 0.6 per cent from Friday's close. There was no settlement Monday because of the US Labour Day holiday. Anadarko Petroleum evacuated workers and shut production at two Gulf of Mexico platforms as Tropical Storm Gordon approached the mouth of the Mississippi River. Meanwhile, output from the Organization of Petroleum Exporting Countries in August rose to the highest level this year.
Oil has rebounded almost 8 per cent from the lows of August as buyers of Iranian crude have started shunning shipments from the Persian Gulf nation even before renewed US sanctions take full effect in November. Investors are watching whether Opec and its allies including Russia will boost production to fill any potential deficit. Meanwhile, the storm nearing the American Gulf Coast is also raising concerns that supply may be disrupted.
"Bullish sentiment is slightly prevailing even though reports point to an increase in Opec output while US production remains at high levels," said Satoru Yoshida, a commodity analyst at Rakuten Securities in Tokyo. "As we are in the middle of hurricane season, oil prices can easily rise."
West Texas Intermediate for October delivery rose as much as 41 cents to $70.21 a barrel on the New York Mercantile Exchange from Friday's close, and traded at $70.06 at 1.56pm. in Tokyo. All trades Monday will be booked Tuesday due to the US holiday. Total volume traded was 340 per cent above the 100-day average.
Brent futures for November settlement traded at $78.08 a barrel on the ICE Futures Europe exchange, down 7 cents. The contract climbed 51 cents to $78.15 on Monday. The global benchmark crude traded at an $8.43 premium to WTI for the same month.
December futures in Shanghai rose 0.1 per cent to 521.7 yuan a barrel. The contract dropped 0.5 per cent on Monday. – Bloomberg
