Oil Price Jumps 4% as Producers Shut Down Rigs Ahead of Storm

• Oil Price Jumps 4% as Producers Shut Down Rigs Ahead of Storm

Global oil prices rose 3 percent on Tuesday as U.S producers began shutting down rigs ahead of a possible storm in the Gulf of Mexico.

According to statements released by the affected companies operating in the affected region, Chevron Corp, Royal Dutch Shell Plc, BP Plc and BHP Group Ltd have started moving staff from 15 offshore energy platforms.

While Exxon Mobil Corp said it is “closely monitoring” the situation to determine if any of its facility would be affected.

Brent crude oil, against which Nigerian crude oil is measured, rose 4.4 percent to $67.38 a barrel on Wednesday. While the U.S. West Texas Intermediate jumped 4.5 percent to $60.83.

Another reason for the sudden jump in prices was the Energy Information Administration (EIA) report that showed an unexpected 9.5 million barrels drop in US oil inventory for the week ended July 5.

The unexpected drop contributed to the sudden jump in oil prices as it was more than the 3.1 million barrels projected by analysts.

Despite inventories falling for four consecutive weeks, according to the EIA report. U.S oil production continues to rise and has risen to 12.3 million barrels per day last week. Suggesting US rising production will continue to impact OPEC strategy regardless and likely to limit bullish run in the near-term.

“Rising U.S. shale production levels, subdued global economic momentum and existing trade uncertainties will cap bullish gains for crude oil futures,” said Benjamin Lu, an analyst at Phillip Futures in Singapore.