Oil Holds Losses as Storm Moves Inland
(Bloomberg) -- Oil held losses below $60 a barrel after the biggest decline in almost two weeks as a tropical storm that shut almost three-quarters of U.S. Gulf of Mexico production moved inland.
Futures were little changed after sliding 1.1% on Monday. Offshore oil producers and refiners along the coast are restoring operations after storm Barry was downgraded, with about 69% of crude output in the U.S. Gulf of Mexico still shuttered, down from a peak of 73% on Sunday. American crude inventories probably declined for a fifth week, according to a Bloomberg survey.
While oil has rallied about 16% since mid-June on shrinking American stockpiles and rising tensions with Iran, concerns about expanding supply and weakening demand continue to dent the outlook. China’s economy slowed to the weakest pace in almost three decades in the second quarter amid an ongoing trade dispute with the U.S., while the International Energy Agency said Friday that global inventories unexpectedly swelled in the first half of this year.
“With China’s growth slowing, worries about the global economy are weighing on prices,” said Miyoko Nakashima, a senior strategist at Mizuho Securities Co. in Tokyo. Still, tensions with Iran are providing some support to oil, he said.
West Texas Intermediate for August delivery fell 6 cents to $59.52 on the New York Mercantile Exchange as of 7:40 a.m. in London after declining as much as 0.7% earlier. The contract lost 63 cents to $59.58 on Monday, the biggest drop since July 2.
Brent for September settlement rose 3 cents to $66.51 a barrel on the ICE Futures Europe Exchange. It slipped 0.4% on Monday. The global benchmark crude traded at a premium of $6.87 to WTI for the same month.
Royal Dutch Shell Plc and ConocoPhillips are among companies seeking to restore output at offshore platforms in the Gulf of Mexico now that weather conditions have improved after Barry made landfall. The region accounts for 16% of total U.S. crude oil production, according to the Energy Department.
U.S. crude inventories declined by 2.75 million barrels last week, according to the median estimate of 10 analysts surveyed by Bloomberg before Energy Information Administration data Wednesday. Stockpiles fell to the lowest in almost three months in the week ended July 5.
--With assistance from James Thornhill.
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