Oil gained a third week as investors focused on ongoing production stops in the US Gulf of Mexico as more refineries resumed nearly two weeks after Hurricane Ida.
New York futures posted their longest weekly gains since July, after closing 2.3% higher on Friday. More than a million barrels a day of U.S. offshore crude oil production remains closed after Ida swept the area nearly two weeks ago. Meanwhile, more refineries are resuming operations in Louisiana, increasing the demand for crude oil. The slow return of offshore production led Exxon Mobil Corp. Obtained approval for a second batch of crude oil from the Department of Energy’s strategic reserves for use at the Baton Rouge plant.
“The market is now focused on the US supply situation,” said Andrew Lebow, senior partner at the Commodity Research Group. “The losses caused by the longer failure in the Golf are more noticeable.”
Even after China took an unprecedented move this week to intervene in oil markets, New York crude oil has been trading in a $ 4 band since late August. The market has been dragged in different directions as most of the production in the Gulf of Mexico is still cut off by Hurricane Ida and falling American inventories act as bullish triggers that are thwarted by the ubiquitous pandemic.
Marathon Petroleum’s 578,000-barrel-per-day refinery in Garyville, Louisiana is back in operation for the first time before Ida crashed into the coast. Exxon Mobil Corp. secured another 1.5 million barrels for the Strategic Petroleum Reserve for its Baton Rouge refinery, which was operating normally on Thursday.
- West Texas Intermediate for October delivery rose $ 1.58 to $ 69.72 a barrel in New York
- Brent for November settlement rose $ 1.54 to $ 72.99 a barrel
China’s bold but vague statement about releasing oil reserves from its huge strategic inventory has made some traders question the lasting effects of such a move by the world’s largest crude oil importer.
The National Food and Strategic Reserves Administration also said this week that a “normalized” rotation of crude oil in government inventories “is an important way for the reserves to play their role in balancing the market,” suggesting that they may continues to release barrel. It added that raising reserves through open auctions “will better stabilize supply and demand in the domestic market”.
“China’s SPR is very healthy because they bought so much last year when prices were significantly lower,” Lebow said. “You can wait to fill it up again.”
(With the support of Saket Sundria and Rakteem Katakey. © 2021 Bloomberg LP)