Crude Oil Slides as US Output Returns Gradually
By Adedapo Adesanya
Crude oil fell on Friday as energy companies in the Gulf of Mexico restarted production after back-to-back hurricanes in the region clamped down on output in the United States.
At the market yesterday, the Brent crude futures fell by 33 cents or 0.44 per cent to settle at $75.34 per barrel, while the US West Texas Intermediate (WTI) crude futures fell by 64 cents or 0.88 per cent to settle at $71.97 a barrel.
Despite the bearish outcome, the Brent reported a weekly gain of 3.3 per cent, while the US crude benchmark was up by 3.2 per cent, supported by tight supplies due to the hurricane outages.
Friday’s slump followed five straight sessions of rises for the global crude benchmark, hitting its highest since late July just as the US crude hit its highest since early August.
Gulf Coast crude oil exports are flowing again after hurricanes Nicholas and Ida took out 26 million barrels of offshore production.
Restarts continued with less than 30 per cent of US Gulf of Mexico crude output offline, meaning a higher number have been restored.
The market was also pressured by a strengthened US Dollar, which makes the dollar-denominated asset more expensive for foreign buyers.
The dollar climbed to the higher end of recent ranges against other major currencies as traders looked to next week’s Federal Reserve policy meeting for indications on how soon the US central bank will start to taper stimulus.
The easing of concerns over potential storm damage took the market’s focus away from the International Energy Agency (IEA) and Organisation of the Petroleum Exporting Countries (OPEC) forecasts, which see an improvement in oil demand, but this news is expected to be supportive over the longer-term.
The surge of the Delta variant is set to partially delay oil demand recovery into the next year when robust economic growth and stronger recovery in fuel consumption will see global oil demand averaging 100.8 million barrels per day and exceeding pre-COVID levels, OPEC said.
The Vienna-based cartel raised its 2022 demand forecast by a shocking 900,000 barrels per day while the IEA raised its 2022 figures to 3.2 million barrels per day.