Sign Up for FREE Daily Energy News
  • Stay Connected
  • linkedin
  • twitter
  • facebook
  • youtube2

Copper Tip Energy Services
Vista Projects
Vista Projects
Copper Tip Energy

Oil Caps Third Weekly Gain With Ida’s Supply Impact in View

English Español 简体中文 हिन्दी Português
These translations are done via Google Translate
(Bloomberg) Oil gained a third week as investors focused on the ongoing production shut-ins in the U.S. Gulf of Mexico as more refineries have resumed operations nearly two weeks after Hurricane Ida tore through the region.

Futures in New York posted its longest set of weekly gains since July after ending Friday 2.3% higher. More than a million barrels a day of U.S. offshore crude production remains shut in after Ida swept through the area nearly two weeks ago. Meanwhile, more Louisiana refineries are resuming operations, raising demand for crude oil. The slow return of offshore production led to Exxon Mobil Corp. to secure approval for a second load of crude from the Department of Energy’s Strategic Reserves for use at Baton Rouge plant.

“The market is now laser focused on the supply situation in the U.S.,” said Andrew Lebow, senior partner at Commodity Research Group. “The losses from the extended outage in the Gulf are being felt more.”

Even after China made an unprecedented move to intervene in oil markets this week, crude in New York has traded in a $4 band since late August. The market has been pulled in different directions with the majority of Gulf of Mexico production still shut from Hurricane Ida and falling American stockpiles acting as bullish triggers, countered by the ever-present pandemic.


EnergyNow Stand Out 2023 Promo
Oil has traded in a tight band since late August

Marathon Petroleum’s 578,000-barrel-a-day refinery in Garyville, Louisiana, is back in operation for the first time since before Ida slammed into the coast. Exxon Mobil Corp. secured another 1.5 million barrels for the Strategic Petroleum Reserve for its Baton Rouge refinery, which was operating normally as of Thursday.

  • West Texas Intermediate for October delivery climbed $1.58 to settle at $69.72 a barrel in New York
  • Brent for November settlement rose $1.54 to $72.99 a barrel

China’s bold but vague declaration to release oil reserves from its massive strategic stockpiles has some traders questioning the lasting impact of such a move by the world’s biggest crude importer.

The National Food and Strategic Reserves Administration also said this week that a “normalized” rotation of crude oil in the state stockpiles is “an important way for the reserves to play its role in balancing the market,” indicating that it may continue to release barrels. It added that putting reserves on the market through open auctions “will better stabilize domestic market supply and demand.”

“China’s SPR is very healthy because they bought so much last year when prices were significantly lower,” said Lebow. “They may wait to replenish it.”

Other market news:
  • The world has steadily cut the amount of oil needed to power its economy, but the U.S. shale boom in the last decade slowed that decline and poses a challenge for transitioning to cleaner energy.
  • Libya’s oil production is in danger of slumping again, as a political power struggle threatens to end a period of relative stability.
  • Royal Dutch Shell Plc’s Nigerian unit lifted a force majeure on exports of crude oil from the country’s Forcados terminal, ending restrictions that severely dented the West African nation’s shipments.

Share This:

More News Articles