Investing.com - Oil prices held at a seven-week high on Thursday as storm worries in the Gulf of Mexico and heightened tensions in the Middle East outweighed OPEC’s forecast for a large crude surplus in 2020 as U.S. shale production continues to surge.
New York-traded West Texas Intermediate crude futures gained 16 cents, or 0.3%, to $60.59 a barrel by 7:40 AM ET (11:40 GMT), their highest level since May 23.
Brent crude futures, the benchmark for oil prices outside the U.S., traded up 18 cents, or 0.3%, to $67.19, their highest level since May 29.
In its latest monthly report released Thursday, OPEC forecast global oil demand to rise by 1.14 million barrels per day (bpd) next year, matching the projection for 2019. But the cartel forecast an acceleration in non-OPEC supply growth to an average of 2.44 million bpd in 2020, from an expected 2.05 million bpd this year.
“U.S. tight crude production is anticipated to continue to grow as new pipelines will allow more Permian crude to flow to the U.S. Gulf coast export hub. More than 2.5 million bpd of new pipeline capacity in the Permian is expected to become operational by July 2020," the report said, casting light on escalating output in U.S. shale production.
Breaking down the data, Ole Hansen, head of commodity strategy at Saxo Bank, tweeted that the report reflects expectations that “supplies from the cartel’s rivals will grow by more than twice as much as global oil demand in 2020." That implies that OPEC and its partners may need to make even deeper cuts to their output to keep the market in balance.
Despite the bearish report, oil was supported by weather forecasts for the Gulf of Mexico.
“Traders shouldn’t take their eyes off of the Gulf of Mexico for the rest of this week and next as a major weather system - to be named Tropical Storm Barry when it reaches sustained winds of 39 miles per hour - has the potential to impact oil production, refining, exports from the U.S., imports to the U.S. and prices,” Ellen Wald, president of Transversal Consulting and Investing.com contributor, said.
U.S. oil producers on Wednesday cut nearly a third of Gulf of Mexico crude output ahead of what could be one of the first major storms of the Atlantic hurricane season.
Preparations have already seen fifteen production platforms and four rigs evacuated in the north central Gulf of Mexico, according to a U.S. regulator cited by Reuters.
Also supporting prices, Iran reportedly attempted to seize a British oil tanker in the Persian Gulf, according to CNN, although Tehran officially denied the report.
Tensions have been high in the Middle East after attacks on tankers and the downing of a U.S. drone by Iran last month.
In other energy trading, gasoline futures gained 0.7% to $2.0196 a gallon by 7:43 AM ET (11:43 GMT), while heating oil rose 0.9% to $2.0088 a gallon.
Lastly, natural gas futures traded up 1.3% to $2.476 per million British thermal unit.
-- Reuters contributed to this report.