[ferro-alloys.com] Crude oil futures were lower during mid-morning trade in Asia Wednesday as production loss from Tropical Storm Gordon in the Gulf of Mexico was increasingly seen to be limited.
Saudi Arabia's plan to boost output capacity by 1 million b/d also kept a lid on prices, industry sources said. At 11:15 am Singapore time (0315 GMT), ICE November Brent crude futures were down 29 cents/b (0.37%) from Tuesday's settle at $77.88/b, while the NYMEX October light sweet crude contract was 49 cents/b (0.70%) lower at $70.16/b.
"Oil markets orchestrated an upswing, with Brent testing May levels after Tropical Storm Gordon hit the Gulf of Mexico, but prices pulled back considerably as the magnitude of the storm suggests production losses will be limited," OANDA's head of trading Stephen Innes said.
Meanwhile, Saudi Arabia's offshore oil expansion plans have taken a step forward with the awarding of a contract to Baker Hughes to start drilling works in September at Marjan in the Persian Gulf.
The project aims to raise Marjan's production capacity by 300,000 b/d. It is the first of three major offshore expansions that include the 800,000 b/d Zuluf and 200,000 b/d Berri fields.
Adding another 1 million b/d of capacity by 2023 from the three offshore fields will help offset reduced output from older assets, S&P Global Platts reported.
Market participants were also continuing to monitor developments in US sanctions on Iran, as well as the US-China trade tensions.
Japanese refiner Cosmo Oil said Tuesday it does not plan to load any Iran crude oil in October and is still monitoring talks between Japan and the US before making a final decision on its import policy.
"With the anticipation of up to 1.5 million b/d [being] affected by the US sanctions on Iran, one would expect prices to move higher in the weeks ahead as hedge funds start to re-engage long positions," Innes said.