Crude advanced as Hurricane Michael shut more offshore oil platforms and the International Energy Agency warned that the global market is entering a “red zone.”
Futures advanced 0.9 percent in New York on Tuesday. As Michael barreled toward Florida, about 40 percent of oil output in the U.S. Gulf of Mexico was shut. Globally, supplies from Iran and Venezuela have been shrinking, creating a “risky situation” for the world economy, said IEA Executive Director Fatih Birol. At the same time, spare crude in American tanks probably increased for a third straight week, according to a Bloomberg survey.
“The market is just struggling with the expectation of the reduction in Iranian exports combined with physical evidence in the U.S. that inventories are rising,” said Kyle Cooper, a consultant at Ion Energy Group LLC.
West Texas Intermediate for November delivery advanced 67 cents to end the session at $74.96 a barrel on the New York Mercantile Exchange.
Brent for December settlement climbed $1.09 to settle at $85 on the London-based ICE Futures Europe exchange. The global benchmark crude traded at a $10.19 premium to WTI for the same month.
The IEA’s Birol made a direct appeal to the Organization of Petroleum Exporting Countries and other major producers to boost output. He welcomed efforts by Saudi Arabia to increase production but said supplies probably will remain tight.
Gasoline declined amid expectations that a shutdown of Irving Oil Corp.’s refinery in eastern Canada following an explosion won’t significantly impact supplies.