Oil gained for a third week, as investors focused on the ongoing production shut-ins in the US Gulf of Mexico because more refineries have resumed operations nearly two weeks after Hurricane Ida tore through the region.
West Texas Intermediate futures posted the longest set of weekly gains since July, after ending Friday 2.32 percent at US$69.72 a barrel, up 0.62 percent from a week earlier.
Brent crude for October delivery was up 2.06 percent at US$72.92 a barrel, posting a weekly increase of 0.43 percent.
Photo: Reuters
More than 1 million barrels a day of US offshore crude production remains shut in after Ida swept through the area nearly two weeks ago.
Meanwhile, more Louisiana refineries are resuming operations, raising demand for crude oil.
The slow return of offshore production led to Exxon Mobil Corp to secure approval for another 1.5 million barrels of crude from the US Department of Energy’s Strategic Reserves for its refinery in Baton Rouge, Louisiana, which was operating normally as of Thursday.
Marathon Petroleum Corp’s 578,000-barrel-a-day refinery in Garyville, Louisiana, is in operation for the first time since before Ida slammed into the coast.
“The market is now laser focused on the supply situation in the US,” Commodity Research Group senior partner Andrew Lebow said. “The losses from the extended outage in the Gulf are being felt more.”
Even after China made an unprecedented move to intervene in oil markets this week, crude in New York has traded in a US$4 band since late last month.
The market has been pulled in different directions with the majority of Gulf of Mexico production still shut from Hurricane Ida and falling US stockpiles acting as bullish triggers, countered by the ever-present COVID-19 pandemic.
China’s bold, but vague declaration to release oil reserves from its massive strategic stockpiles has some traders questioning the lasting impact of such a move by the world’s biggest crude importer.
The Chinese National Food and Strategic Reserves Administration this week also said that a “normalized” rotation of crude oil in the state stockpiles is “an important way for the reserves to play its role in balancing the market,” indicating that it might continue to release barrels.
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