Oct. 17 (UPI) -- Disruptions to U.S. oil production from Hurricane Nate may support a risk-fueled rally in oil prices Tuesday, but concerns about global outages may be fading.
Crude oil prices soared during the Monday session as tensions boiled over in the northern provinces of Iraq. Iraqi and Kurdish forces are sparring over control of the so-called disputed territories in the north and by Tuesday, the Iraqi military had taken the oil fields in Kirkuk.
The Organization of Petroleum Exporting Countries said in a market report published before fighting intensified that geopolitical tensions over the September referendum for independence in the Kurdish north had already added a risk premium to the price of oil.
Citing sources close to an Iraqi oil company working in the north, commodity pricing group S&P Global Platts reported that any disruptions to the flow of oil to a Turkish seaport on the Mediterranean Sea would be temporary. Both Kurdish and Iraqi energy ministers said that, even though tensions are high, there shouldn't be any major disruption to the flow of oil.
The price of oil was moderating after a strong rally in the previous session. The price for Brent crude oil, the global benchmark, was up 0.33 percent at 9:20 a.m. EDT to $58.10 per barrel. West Texas Intermediate, the U.S. benchmark, was up 0.1 percent to $51.91 per barrel.
U.S. President Donald Trump's recent decision to back away from a multilateral nuclear agreement with Iran gave support to crude oil prices last week. By late last week, Hurricane Nate had idled as much as 20 percent of the oil production capacity in the U.S. Gulf of Mexico, though operations were returning to normal by Monday.
Platts estimates that federal U.S. data will show a decline in crude oil inventories of 3.9 million barrels. That matters for traders looking for the return of an elusive balanced market.
Geoffrey Craig, an oil futures editor for Platts, said in an emailed report on inventories the decline in the United States was temporary.
"One of the most recent catalysts for inventory reduction -- a sharp reduction in Gulf of Mexico production -- proved temporary, as output nearly recovered in full by the end of last week, given that no real damage was reported to oil infrastructure following recent hurricanes," he said.
The American Petroleum Institute publishes its own data on crude oil inventories late Tuesday. Federal data are published midway through the morning on Wednesday.