Oil rises to one-week high over U.S. supply concerns

13 Sep Oil rises to one-week high over U.S. supply concerns

Oil prices rose to a one-week high on Monday as concerns over U.S. supply concerns caused by Hurricane Ida, along with expectations for higher demand.

Brent crude rose 67 cents, or 0.9% to $73.59 a barrel, and U.S. West Texas Intermediate (WTI) crude also added 66 cents, or 1%, to $70.38at 0633 GMT. Both markets were at their highest since Sept. 3 earlier in the session.

About three-quarters of the offshore oil production in the U.S. Gulf of Mexico, or about 1.4 million barrels per day, has remained halted since late August, roughly equal to what OPEC member Nigeria produces.

“To compound matters, more oil refineries in Louisiana have resumed operations, raising demand for crude oil,” ANZ analysts said in a note.

Beyond the impact of Ida, market attention will focus this week on potential revisions to the oil demand outlook from the Organization of the Petroleum Operating Countries (OPEC) and the International Energy Agency (IEA) as coronavirus cases continued to rise. OPEC will likely revise its 2022 forecast lower on Monday, two people familiar with the matter said.

“It looks like oil prices may continue to drift in a consolidation range for now, $70-$75 as we mentioned previously,” said Howie Lee, an economist at Singapore’s OCBC bank.

“Markets still need clarity on the virus impacts beyond the very near term and until we get that, it seems like most assets, including oil, may continue to drift sideways.”

Money managers raised their net long U.S. crude futures and options positions in the week to Sept. 7, the U.S. Commodity Futures Trading Commission (CFTC) said on Friday.

Supply risks remain from China’s planned release of oil from strategic reserves while the hope of fresh talks on a wider nuclear deal between Iran and the West was raised after the U.N. atomic watchdog reached an agreement with Iran on Sunday about the overdue servicing of monitoring equipment to keep it running.