Oil prices hovered near six-week highs on tropical storm and geopolitical tensions in the Middle East.
Brent crude futures were up 36 cents at $66.88 a barrel, while US West Texas Intermediate (WTI) crude futures were up 18 cents at $60.38, Reuters reported.
US oil producers in the Gulf of Mexico have reduced more than half their production due to a tropical storm and tensions in the region. However, a forecast from International Energy Agency (IEA) for a worldwide oil surplus capped the gains.
The IEA estimated that increasing US oil output will overtake sluggish global demand and result in a large stocks build across the world in the next nine months. The Organization of the Petroleum Exporting Countries (OPEC) also predicted there could be surplus production in 2020 despite an OPEC-led agreement to restrain supplies.
PVM Oil Associates analyst Stephen Brennock was quoted by Reuters as saying, “It is fair to say that OPEC’s best-laid plans to rebalance the oil market have, so far this year, fallen flat.
“The oil cartel has led from the front in curbing supply since the start of 2019, yet it has failed to quash stubborn oversupply.”
US crude oil inventories have dropped for four weeks and oil companies in the Gulf of Mexico cut over 1 million barrels per day of output, 53% of the region’s production, due to the storm.