Oil near two-month high on hurricane risks, falling U.S. inventories

(Bloomberg) — Oil traded near a two-month high as Hurricane Beryl heralded a potentially worse storm season, while dwindling U.S. crude inventories suggested improving demand.

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Brent crude was trading above $87 a barrel and West Texas Intermediate was trading around $84, with both benchmarks heading for a fourth weekly gain. The risk of Hurricane Beryl to Gulf of Mexico production has eased, but its early appearance has highlighted concerns about a “supercharged” season. Meanwhile, the biggest drop in U.S. inventories in nearly a year signaled a tightening in supply.

Crude oil has been on a slow and steady rise since early June, partly driven by a positive outlook for demand over the northern hemisphere summer, with bullish and downgrade spreads signaling healthy near-term consumption. Signs of weaker demand in Asia have tempered this optimism and led Saudi Aramco to cut its crude prices in the region for the second consecutive month.

Traders will be watching for U.S. jobs data later Friday, which could shed light on the outlook for monetary policy. It will also impact the dollar, which has weakened this week, making commodities denominated in that currency cheaper for international investors.

Geopolitical risks are also significant, including the French elections and concerns about US President Joe Biden’s performance in his debate with Donald Trump. The situation in the Middle East also remains volatile, with signs of progress in truce negotiations between Hamas and Israel but a worsening conflict with Iran-backed Hezbollah.

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