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Oil futures edged lower Thursday, taking a breather after a four-day winning streak pushed the U.S. benchmark to a seven-week high.
West Texas Intermediate crude for October delivery
CL00,
CLV21,
fell 50 cents, or 0.7%, to $72.11 a barrel on the New York Mercantile Exchange. November Brent crude
BRN00,
BRNX21,
the global benchmark, declined 51 cents, or 0.7%, to $74.95 a barrel on ICE Futures Europe. Brent and WTI ended Wednesday at their highest since July 30, based on front-month contracts, according to Dow Jones Market Data.
Crude has found support from a near-term tightening of supplies, amplified by the slow recovery in production in the Gulf of Mexico after Hurricane Ida, which made landfall on the Louisiana Gulf Coast on Aug. 29. Crude found further support this week as Hurricane Nicholas made landfall on the Texas coast, but the storm was seen doing little damage to rigs or infrastructure.
“As Nicholas spared U.S. production from further disruptions, it is difficult to see how oil prices can increase further in the near term, and the market is now likely on top of the curve before returning output drives prices lower — unless, of course, global supply suffers another surprise,” said Nishant Bhushan, oil markets analyst at Rystad Energy, in a note.
Crude was buoyed Wednesday after the Energy Information Administration said that U.S. crude inventories fell by 6.4 million barrels for the week ended Sept. 10, a sixth consecutive weekly decline. The drawdown was larger than the average decline of 3.5 million barrels expected by analysts polled by S&P Global Platts forecast. The American Petroleum Institute on Tuesday reported a 5.4 million-barrel decrease.
Surging European energy prices, meanwhile, are seen providing underlying support for crude and, in particular, natural gas. Prices for the fuel in Europe and the U.K. soared by double digits on Wednesday. On Thursday, CF Industries Holdings Inc.
CF,
shut down operations at two U.K. plants, citing high natural-gas prices.
“A combination of a broader demand recovery, lower inflows and falling indigenous production means that European gas inventories are well below average,” said Warren Patterson, head of commodities strategy at ING, in a note.
With the start of the winter heating season quickly approaching in the northern hemisphere, European storage is only 71% full, compared with the 5-year average of more than 86%, he said, its lowest levels in at least a decade going into winter.
In the U.S., natural-gas futures
NG00,
NGV21,
closed at a 7 1/2-year high on Wednesday, but were in retreat Thursday morning, falling 3.1% to $5.293 per million British thermal units. Futures have rallied more than 21% so far in September.
