Coastal grades firmed on Monday, dealers said, as Gulf of Mexico offshore production was less than expected and as escalating U.S.-Iran tensions rekindled global supply concerns.
"Lower-than-expected offshore production supported GoM medium differentials in late September trade before the selloff into expiry... But assuming GoM production continues to recover, we see downside risk to current October prices, as domestic USGC sour market fundamentals are set to ease," analysts at Energy Aspects wrote in a note.
The consultancy said it assumed output of Poseidon and Southern Green Canyon had been most impacted, with lower total sour supply from the Gulf of Mexico contributing to relatively stronger prices for alternative medium crude.
Meanwhile, a resumption of military action between the U.S. and Iran rekindled market concerns about global supply disruption, as the conflict extended into its sixth month.
U.S. President Donald Trump also said on Sunday that oil from a recently struck deal with Venezuela will be used to replenish the Strategic Petroleum Reserve (SPR), which has been drawn down sharply in recent years to respond to global supply disruptions and high fuel prices.
Stocks of crude oil in the SPR fell by about 3.1 million barrels to 286.6 million barrels last week, the lowest level since November 1982, according to data from the Department of Energy.
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