Oil Remains Bullish as US Hurricane Effect Eases

By Adedapo Adesanya

Oil prices were still in the bullish zone on Thursday after hitting a multi-week high a day earlier as the threat to US Gulf crude production from Hurricane Nicholas receded.

Brent crude gained 26 cents or 0.34 per cent yesterday to trade at $75.71 per barrel, while the US West Texas Intermediate (WTI) moved up by 3 cents or 0.04 per cent to trade at $72.64 per barrel.

Gulf energy companies in the United States have been able to restore pipeline service and electricity quickly after Hurricane Nicholas passed through Texas early this week, allowing them to focus on efforts to repair the damage caused weeks earlier by Hurricane Ida.

Hurricane Nicholas did not have much effect on US production. As a result, oil prices didn’t increase as Ida-affected oil production capacity continues to recover in the US.

Also, crude export operations have returned to normal at two major Libyan oil ports after days of protests and sit-ins that had disrupted loadings, the National Oil Corporation (NOC) said on Thursday.

Protests at Libya’s oil export terminals Es Sider and Ras Lanuf erupted last week, consequently disrupting oil tanker loadings and exports.

Oil also found backing from a surge in European power prices, which have soared because of factors including low gas inventories and lower-than-normal gas supply from Russia.

The support also continued from figures that showed that US crude inventories fell by a bigger-than-expected 6.4 million barrels last week, with offshore oil facilities still recovering from Ida’s impact.

Brent has rallied about 45 per cent this year, supported by supply cuts by the Organization of the Petroleum Exporting Countries (OPEC) and its allies, (OPEC+) plus some recovery from last year’s pandemic-related collapse in demand.

The market is also getting support from projected demand recovery from OPEC and International Energy Agency (IEA). They said global oil use would rise above 100 million barrels per day, a level last reached in 2019, as soon as next year’s second quarter.