Aftermath of Hurricane Ida: Oil Prices Hike
U.S. West Texas Intermediate (WTI) crude rose 0.5% to $70.04, and Brent Crude rose 0.5% to $73.25 a barrel - both reaching the highest prices since September 3.
As the aftermath of Hurricane Ida raises worries on the output of oil supply in the US, oil prices rise for a second session on Monday as higher demands are expected in the near future.
U.S. West Texas Intermediate (WTI) crude rose 32 cents, or 0.5% to $70.04, and Brent Crude rose 33 cents, or 0.5% to $73.25 a barrel at 04:36 GMT - both reaching the highest prices since September 3.
Crude oil demands have risen after more than 75% of offshore oil production in the Gulf of Mexico (1.4 million barrels a day) have been idle since August 2021 - in other words, this is the equivalent of how much Nigeria produces, an OPEC member.
For a change, refiners in the US are resuming activity at a quick pace in comparison to past experiences with storms. Most of the refineries in Louisiana impacted by the storm have already restarted or were restarting on Friday.
Although most of the 9 refineries in Louisiana in addition to a growing number of rigs resumed operations in the last week, some companies are having it difficult. Royal Dutch Shell Plc, the largest oil producer in the US Gulf, canceled exports on Thursday as they dealt with damages to their facilities as a result of the hurricane.
In addition, as coronavirus cases rise, there will be a market focus this week on potential revisions to the oil demand outlook from the Organization of the Petroleum Operating Countries (OPEC) and the International Energy Agency (IEA).
"It looks like oil prices may continue to drift in a consolidation range for now, $70-$75 as we mentioned previously," said Howie Lee, an economist at Singapore's OCBC bank. "Markets still need clarity on the virus impacts beyond the very near term and until we get that, it seems like most assets, including oil, may continue to drift sideways."
On another note, China announced its plan to strategically release oil stockpiles from reserves, which added pressure on the market - oil prices dipped 2.5% upon announcement.