By Adedapo Adesanya
Oil prices rose about 1 per cent on Monday on concerns that a hurricane could disrupt production and refining along the US Gulf Coast.
Brent futures were up by 78 cents or 1.1% to settle at $71.84 a barrel, and the US West Texas Intermediate (WTI) crude gained $1.04 or 1.5% to trade at $68.71 per barrel.
In the US, the world’s largest oil-producing nation, oil and gas producers along the Gulf Coast started evacuating staff and curbing drilling to prepare for Tropical Storm Francine as it churned across the Gulf of Mexico.
Chevron Corp., Exxon Mobil Corp., and Shell Plc have evacuated staff and paused operations on oil platforms in the US Gulf Of Mexico ahead of an expected hurricane.
Reuters reported that the US National Hurricane Center projected Francine will strengthen into a hurricane on Tuesday before hitting the Louisiana coast.
The Gulf Coast accounts for about 50 per cent of the country’s refining capacity, according to the US Energy Information Administration (EIA).
The market is also looking at development revolving around the Organisation of the Petroleum Exporting Countries (OPEC) and its allies, OPEC+ amid demand worries.
In Libya, an OPEC member, the country’s National Oil Corporation (NOC) declared force majeure on several crude cargoes loading from the port of Es Sider, with oil production curtailed by a political standoff over the central bank and oil revenue.
The OPEC+ oil producer group has agreed to delay a planned output increase of 180,000 barrels per day for October by two months in reaction to tumbling crude prices.
Last week during a virtual meeting, the eight OPEC+ members that were planning to start easing the cuts in October agreed that they would extend the current cuts until the end of November, “after which these cuts will be gradually phased out monthly starting December 1st, 2024.”
OPEC+ added the warning that it would still have “the flexibility to pause or reverse the adjustments as necessary”, referring to the additions to global supply.
The US government is due to release a crucial inflation report later this week and it could cement whether the Federal Reserve will start cutting interest rates as soon as this month. Lower rates can boost economic growth and oil demand.
The US central bank hiked rates aggressively in 2022 and 2023 to tame a surge in inflation.
Modupe Gbadeyanka