Oil Jumps as Hurricane-Induced Disruption Drags Supply

Oil Jumps as Hurricane-Induced Disruption Drags Supply

Oil jumps on Monday as hurricane-induced disruption keeps United States output low while Organisation of Petroleum Exporting Countries (OPEC) keeps forecast for the year unchanged.

U.S. output remains slow after Hurricane Ida slammed into the Gulf Coast where almost half of the production is still offline and worries another storm could affect output in Texas this week.

In its monthly oil report, OPEC kept its global oil demand forecast for 2021 but predict a 4.15 million-barrel rise for 2022 amidst pressure from delta variant and issues around covid-19 vaccines.

Today, the International benchmark Brent crude price increased 55 cents to $73.47 a barrel while U.S. West Texas Intermediate (WTI) crude jumped 68 cents to $70.40.

Royal Dutch Shell, the largest oil producer in the US Gulf of Mexico region, cancelled some oil exports due to the hurricane’s damage to offshore platforms.

Shell began evacuating staff from a U.S. Gulf of Mexico oil platform and other firms began preparing for hurricane-force winds.

Even though OPEC said further oil demand recovery would be delayed until next year when consumption will exceed pre-pandemic rates, analysts noted OPEC and its allies, including Russia still will raise output.

In addition to the OPEC demand forecast, other bearish factors held back oil price gains, including potential supply increases from planned releases of oil from strategic reserves in the United States and China, and the possibility Iran could be closer to selling oil to the world again.

Traders noted China’s planned release of oil from strategic reserves could boost supplies available in the world the second-biggest oil consumer.

Investor supply concerns continue to limit upward price movements after China last week announced that it would release crude oil reserves to the market via public auction.

The administration for China’s state reserves said the move aims to ease the pressure of high feedstock costs on domestic refiners.

Earlier on Monday, China said details of planned crude oil sales would be announced in due course.

According to the latest data from China’s National Bureau of Statistics, there are nine storage bases in the country with a total crude oil reserve capacity of 237.66 million barrels.

Investors are now keeping tabs on oil market reports to be released this week by the Organization of the Petroleum Exporting Countries (OPEC) and the International Energy Agency (IEA). Experts predict that OPEC will revise down its oil demand forecast for 2022.

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Oil Jumps as Hurricane-Induced Disruption Drags Supply