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US futures contracts for August shipments were $ 60.43, up 4.5%, according to CME data. It's a seven-week high and the first futures are over $ 60 since May 22, according to Refinitiv.
The National Hurricane Center predicts tropical storm Barry will form in the Gulf of Mexico by Thursday and a hurricane will strengthen by Saturday, as the tropical storm is expected to hit Louisiana. The storm system is already causing flooding in Louisiana.
Oil producers in the Gulf of Mexico have "started evacuating and stopping the production of some of their offshore platforms," wrote Warren Patterson and Wenyu Yao, commodities strategists at ING, in a research note.
Employees from 15 production platforms and four rigs in the Gulf of Mexico have been evacuated, according to the US Bureau of Safety and Environmental Enforcement. Three other platforms have been moved as a precaution.
ING's strategists also pointed out that while the Gulf of Mexico was once the engine of US oil production, its market share has declined due to strong shale growth.
In addition to the concerns raised by the storm, the American Petroleum Institute and the Energy Information Administration also announced that crude oil inventories had declined last week. Scotiabank Energy Analyst Michael Loewen has called EIA data "a fundamentally bullish new report".
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