By Adedapo Adesanya
Oil prices fell on Friday as US Gulf of Mexico crude production resumed following Hurricane Francine, with Brent crude futures trading at $71.61 a barrel after it lost 36 cents or 0.5 per cent, and the West Texas Intermediate (WTI) closing at $68.65 a barrel after it shed 32 cents 0.5 per cent.
For the week, Brent logged an increase of about 0.8 per cent since the close of last Friday’s session, while WTI registered a roughly 1.4 per cent gain.
US Gulf Coast production and refining activity resumed on Friday, leading investors to opt for offloading oil contracts going into the weekend.
Official data showed that the storm on Thursday nearly shut in 42 per cent of oil production in the region which accounts for about 15 per cent of U.S. output.
Exxon, which had cut operation rates at its Baton Rouge refinery to just a fifth of capacity, had now brought the refinery back online.
“Our Baton Rouge area facilities are operating as normal. We continue to meet customer commitments,” a spokeswoman for the company said.
Shell is currently examining its Norco refinery after it had to shut down its diesel production hydrocracker because of the storm.
“At this early stage, there does not appear to be serious damage from wind, rain or storm surge at the facilities,” Shell told Reuters.
Crude prices also took a hit from the US rig count from energy services group Baker Hughes, which reported the biggest weekly rise in oil and natural gas rigs in a year.
Crude oil rigs rose by five to 488 this week, while gas rigs rose by three to 97 with the increase being the biggest since the week to September 15, 2023.
Both the Organization of the Petroleum Exporting Countries (OPEC) and the International Energy Agency (IEA) lowered their demand growth forecasts this week, citing economic struggles in China, the world’s largest oil importer.
Meanwhile, analysts at Standard Chartered pointed out that oil markets are set to tighten further in the coming months as some OPEC+ members cut production.
Back in July, Russia, Iraq and Kazakhstan submitted their compensation plans to the OPEC Secretariat for overproduced crude volumes for the first six months of 2024.
According to the analysts, the compensation for overproduction will result in OPEC production clocking in at 530,000 barrels per day lower in the fourth quarter of 2024; 540,000 barrels per day lower in Q1 and Q2-2025 and 560,000 per barrels per day lower in Q3-2025, if all commitments are kept.
