Crude Prices Drop as Mexico Restores Oil Output
By Adedapo Adesanya
Crude prices went in the negative for the first time in four days on Thursday as Mexico restored some output after a fire disrupted supplies.
Brent crude oil futures went down by 69 cents or 0.96 per cent yesterday to $71.55 per barrel while the West Texas Intermediate (WTI) crude oil futures shed 54 cents or 0.79 per cent to sell at $67.82 per barrel.
Mexico’s state oil company, Pemex, has started restoring part of more than 400,000 barrels per day in oil production it lost due to an inferno that gutted an offshore platform last weekend.
It has so far recovered 71,000 barrels per day of production and in the next few hours, it expects to add an additional 110,000 barrels per day.
The incident claimed five lives and injured six. The company said it had found the remains of two workers who were initially considered missing.
The platform where the fire erupted is part of a gas-processing hub in Campeche Bay. Its outage as a result of the fire reduced Pemex’s production by some 444,000 barrels per day.
Mexican President Andres Manuel Lopez Obrador on Thursday said Pemex will produce an average of 1.8 million barrels per day by year-end, despite the inferno.
This was the second fire at a Pemex platform for the past two months. The first one occurred in early July and the company said at the time that it was caused by a gas pipeline leak and a lightning storm.
Also pressuring prices were renewed concerns over demand due to rising COVID-19 infections.
Fresh outbreaks fueled by the Delta variant of the coronavirus are raising concerns about the strength of the economic recovery globally, hitting demand for oil and other commodities.
The bearish outcome turned the market away from price boosting news that US crude inventories fell last week for a third consecutive week while overall fuel demand increased to the most since March 2020, according to the Energy Information Administration (EIA).
The market is bracing for the impact of a storm brewing in the United States that is classified as major and can bring devastating damage onshore.
Oil majors have started evacuating non-essential personnel from offshore U.S. Gulf of Mexico platforms ahead of a storm expected to enter the region this weekend.