Oil in New York posted its second weekly gain as the impact of Hurricane Ida continues to snarl US oil production, although prices edged lower on Friday following a weak US jobs report.
West Texas Intermediate futures capped a gain of 0.8 percent for the week, despite shedding 1 percent on Friday to settle at US$69.29 a barrel.
Brent crude for October delivery on Friday fell 0.6 percent to settle at US$72.61 a barrel, up 1.3 percent for the week.
The deceleration in hiring in the US reflects growing fears of the Delta variant of SARS-CoV-2 and complicates a potential decision by the US Federal Reserve to begin scaling back stimulus.
Traders exiting positions ahead of the long weekend in the US and Canada also exerted some downward pressure on prices Friday afternoon.
“At this point, Ida storm has been quite supportive for oil due to the production disruptions, but as the region recovers and shuttered capacity slowly returns, Ida will be less and less of a supporting factor,” TD Securities head of commodity strategy Bart Melek said.
Longer-term, it would be all about OPEC+ and the Delta variant’s effects on demand, he added.
Oil climbed this week as the market appears set to remain in deficit even as OPEC and its allies push ahead with reviving supply.
OPEC+ has said crude stockpiles in developed countries are falling and an economic recovery is accelerating.
There have been signs of revival in Asia, where COVID-19 infections had surged. China’s independent refiners are buying more crude, and gasoline consumption in India is improving.
Meanwhile, the return of Iranian supply looks even farther away.
“Oil prices continue to trade at relatively elevated levels despite OPEC+ reaffirming plans to normalize output and COVID-19 demand woes still present,” Danske Bank A/S senior analyst Jens Pedersen said.
Exxon Mobil Corp is tapping the US Strategic Petroleum Reserve, with more than 90 percent of the Gulf of Mexico’s oil production still shut as of Friday afternoon, while Louisiana’s refineries are still reeling from the impact of the storm.
Options markets have also mirrored the positive sentiment in crude. The premium of bearish put options for global Brent benchmark over bullish calls fell to its narrowest since mid-June this week. That is a sign that traders are not paying as much to protect against falling prices.
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