Oil prices rise amid Mexican storm; OPEC forecast report in focus

Oil prices rose on Friday in Asia after U.S. oil producers cut more than half of Gulf of Mexico crude output due to Tropical Storm Barry which is expected to make landfall over the weekend.

U.S. Crude Oil WTI Futures were up 0.6% to $60.55 by 12:24 AM ET (04:24 GMT). International Brent Oil Futures also gained 0.6% to $66.94.

“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 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 contributor, said.

Meanwhile, in its latest monthly report released Thursday, the Organization of the Petroleum Exporting Countries (OPEC) forecasted global oil demand will rise by 1.14 million barrels per day (bpd) next year, matching the projection for 2019. But the cartel forecasted 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.

Geopolitical tension in the Middle East is also providing support to the oil market. Earlier this week, Iran tried to seize a British tanker in Persian Gulf. The oil tanker was crossing into the Strait of Hormuz area when Iranian boats approached it and demanded that the tanker change course and stop in nearby Iranian territorial waters, CNN reported.