OLD BRIDGE, N.J. (DTN) -- Oil futures nearest to delivery traded on the New York Mercantile Exchange and Brent crude on the Intercontinental Exchange settled higher Tuesday. West Texas Intermediate futures advanced for a third straight day to a one-week high above $74 bbl, while Brent crude continued to a better than one-week high above $78 bbl amid a myriad of global supply disruptions that threaten to squeeze spare production capacity as global oil producers boost output to counter the lost supply.
This week's price advance for Brent crude comes amid a plethora of global supply disruptions as civil war slashes exports from Libya, Venezuela struggles to export crude supplies with production already reduced by more than 500,000 bpd from year ago levels, and Iranian exports are off more than 500,000 bpd from May to 2.2 million bpd in June as buyers react to U.S. sanctions against Iran.
The quick drop in Iranian oil exports was unexpected by many analysts when the U.S. reimposed sanctions in May that take effect on Nov. 4. U.S. officials barnstormed countries that buy Iranian crude, warning that doing so after Nov. 4 would prompt financial punishment. Since then, U.S. Secretary of State Mike Pompeo told Sky News Tuesday that the United States would consider requests from a "handful" of countries seeking relief from U.S. sanctions.
September WTI futures settled up 26 cents bbl to $74.11 bbl, while the October contract rose 58 cents bbl to $72.56 bbl. August Brent crude finished 79 cents bbl higher at $78.86, the highest spot settlement since June 29.
On the products side, August RBOB gasoline finished 1.18 cents higher to $2.1603 gallon, while the September contract rose 1.32 cents gallon to $2.1396. August ULSD contracts advanced 2.61 cents to $2.2218 gallon, while the September contract finished 2.6 cents higher at $2.2273 gallon.
In North America, an estimated 360,000 bpd of Syncrude oil sands production in Alberta, Canada, remains shut-in following a June 20 upgrader outage, with majority owner Suncor announcing this weekend the outage would likely extend through mid-September with output increases phased in during July and August. While the units were expected back online by Aug. 1, the operator will take longer to conduct repairs and do maintenance tasks originally planned to be completed at a later date.
Analysts say reduced supply from Canada is contributing to a steady decline in oil stocks held at Cushing, Oklahoma, the delivery point for the WTI contract. Last week, the Energy Information Administration reported inventory was drawn down for the seventh straight week through June 29 to 35% of capacity at 27.8 million bbl, the lowest stock level since December 2014.
Traders are expected to take additional pricing cues from the weekly supply report from the American Petroleum Institute to be released at 4:30 PM ET, with the EIA to release its dataset Wednesday morning.
Brian Whary can be reached at email@example.com
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