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Crude oil prices rise as supply issues persist post Hurricane Ida

  • Author
  • Jasper Chan
  • Editor
  • Manish Parashar
  • Commodity
  • Oil Shipping

0308 GMT: Crude oil futures were higher in midmorning Asia trade Sept. 9 as the market eyed a tightened supply outlook following Hurricane Ida.

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At 11:08 am Singapore time (0308 GMT), ICE November Brent futures was 23 cents/b (0.32%) higher at $72.83/b while the NYMEX October WTI contract was up 14 cents/b (0.20%) at $69.44/b.

"Oil prices seem to be shrugging off the recent strength in dollar, suggesting that near-term focus continues to revolve around the pace of supplies' recovery from Hurricane Ida, along with the demand outlook for oil," IG Market Strategist Yeap Jun Rong told S&P Global Platts Sept. 9, adding that a delay in recovery efforts for oil production from the impact of Ida will serve to underpin prices in the near term.

Several analyst shared a similar sentiment, saying that crude oil prices gained as supply issues continued to plague the market.

US production is still struggling to recover from Hurricane Ida. The extensive damage to infrastructure and power outages mean Ida has knocked off more supply after nine days than any other storm.

After more than a week when the Category 4 storm ripped through the region, 77% of US Gulf of Mexico output remains shut, according to the Bureau of Safety and Environmental Enforcement as of Sept 8.

Elsewhere in Libya, protesters were blocking oil exports at the ports of Es Sider and Ras Lanuf, supporting oil prices.

"Compounding this was fears of supply disruptions in Libya. A fresh wave of protests at key oilfields and ports could reduce production as much as 800kb/d as protester shave halted operations and blocked tankers from loading as they seek the removal of key officials at the National Oil Corp," ANZ research analysts said in a note Sept. 9.

In inventory news, the US commercial crude stocks declined 2.88 million barrels in the week ended Sept. 3, the American Petroleum Institute said Sept. 8

Analysts surveyed Sept. 7 by Platts had called for a 7.4 million-barrel draw over the same period.

Meanwhile, the US Energy Information Administration in its September Short-Term Energy Outlook released Sept. 8 lowered the global oil demand estimate for 2022 by 240,000 b/d to 101.01 million b/d.

The EIA cut its 2021 estimate for WTI crude prices by 24 cents/b to $65.69/b and expects prices to fall further in 2022 to average $62.37/b. Similarly, the EIA trimmed its Brent crude spot price estimate for 2021 by 10 cents/b to $68.61/b while maintaining its 2022 estimate at $66.04/b.