By Adedapo Adesanya
Crude oil shed around 2 per cent on Friday on expectations that supply disruptions in the United States Gulf of Mexico would be short-term.
The Brent crude was sold for $98.15 per barrel after it dropped $1.45 or 1.5 per cent as the US West Texas Intermediate (WTI) crude closed at $92.09 per barrel after declining by $2.25 or 2.4 per cent.
On Thursday, a top Gulf of Mexico oil producer in the US, Shell, said it halted production at three deepwater platforms in the region. The three platforms are designed to produce up to 410,000 barrels of oil per day combined.
The disruption would have shut prices up but it was reported that crews were expected to replace a damaged oil pipeline piece, allowing for the resumption of production at seven offshore U.S. Gulf of Mexico oil platforms.
The US is witnessing crude oil inventories that are 5 per cent below the five-year average, with production now 900,000 barrels per day below its peak prior to the COVID pandemic.
The market also absorbed contrasting demand views from the Organisation of the Petroleum Exporting Countries (OPEC) and the International Energy Agency (IEA).
OPEC cut its forecast for growth in world oil demand in 2022 by 260,000 barrels per day. It now expects demand to rise by 3.1 million barrels per day this year.
The IEA, meanwhile, raised its demand growth forecast to 2.1 million barrels per day, citing gas-to-oil switching in power generation
The IEA also raised its outlook for the Russian oil supply by 500,000 barrels per day for the second half of 2022 but said OPEC would struggle to boost production.
European sanctions on Russian oil are due to tighten later this year while a six-month coordinated energy release agreed by the US and other developed economies is due to run its course by the end of the year.
US oil rigs rose three to 601 this week, energy services firm Baker Hughes Co said. The rig count, an indicator of future output, has been slow to grow with oil production only seen recovering to pre-pandemic levels next year.
