NEW YORK - Oil prices rose on Tuesday as the market prepared for potential supply disruptions due to a hurricane forecast to hit the U.S. Gulf Coast, but gains were capped by a report that Cushing, Oklahoma, stockpiles rose last week.
U.S. West Texas Intermediate (WTI) crude futures rose 32 cents to $70.12 a barrel by 11:34 a.m. EDT (1534 GMT) after hitting a session high of $71.40. U.S. markets were closed on Monday for Labor Day.
Brent crude, which traded on Monday, was up 20 cents at $78.35 a barrel, down from a session high of $79.72.
Both benchmarks jumped earlier after the evacuation of two Gulf of Mexico oil platforms in preparation for Tropical Storm Gordon. The storm was expected to become a hurricane before it makes landfall as a Category 1 hurricane near the Mississippi-Alabama border.
Vessel traffic along the U.S. Gulf Coast on Tuesday was under restrictions ahead of Gordon.
The Gulf of Mexico is home to 17 percent of U.S. crude oil production and 5 percent of natural gas output daily, according to the U.S. Energy Information Administration. On land, the Gulf Coast serves as a major U.S. refining hub.
Prices moved lower in mid-morning trading, however, as market participants saw the market as overbought, said Phil Flynn, analyst at Price Futures Group in Chicago.
"That doesn't mean the storm premium buying is over by any stretch of the imagination," Flynn said. "It was just a little ahead of itself. There's still a few hours to see what the storm is going to do and what other infrastructure is going to be impacted."
Prices also pulled back from earlier highs after Cushing, Oklahoma, crude inventories rose nearly 754,000 barrels from Aug. 24 to Friday, traders said, citing a report from market intelligence firm Genscape.
Global oil markets have tightened over the last month, pushing up Brent prices by more than 10 percent since the middle of August. Investors anticipate less supply from Iran as U.S. sanctions on Tehran begin to bite.
Harry Tchilinguirian, oil strategist at BNP Paribas, warned of "supply issues" into 2019.
"Crude oil export losses from Iran due to U.S. sanctions, production decline in Venezuela and episodic outages in Libya are unlikely to be offset entirely by corresponding rises in OPEC+ production," Tchilinguirian said.
BNP Paribas expects Brent to average $79 in 2019.