Crude oil futures were higher in mid-morning trade in Asia Sept. 14 on concerns about tight supply in the US during hurricane season and OPEC+ strengthening its demand outlook for 2022.
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At 10:25 am Singapore time (0225 GMT), the ICE November Brent futures contract was up 32 cents/b (0.44%) from the previous settle at $73.83/b, while the NYMEX October WTI contract was up 36 cents/b (0.51%) at $70.81/b.
"Crude oil gained amid signs of further supply disruptions. Prices have been rising as the US oil industry struggles to get back on its feet following Hurricane Ida," ANZ research analysts said in a note Sept. 14. About 44% of capacity was still offline and efforts to restore output may be delayed by another storm, they added.
Supply concerns were compounded by the emergence of Tropical Storm Nicholas on the Texas Gulf Coast as neighboring Louisiana and US Gulf of Mexico oil and gas producers continue to pick up from the devastation of Hurricane Ida two weeks ago.
However the National Hurricane Center said Nicholas, with maximum sustained winds of 60 mph, was expected to be more of a rain event as it makes landfall in the coming hours, unlike Ida with Category 4 winds. There were few reports of refinery shutdowns ahead of Nicholas, with most refiners on the Texas coast and in western Louisiana monitoring the storm's progress and implementing preparedness plans.
"Tropical storm Nicholas is now set to make landfall along the Texas coast. Some producers have already evacuated staff from offshore platforms and we will need to keep a close eye once again on downstream assets along the Gulf Coast," ING research analysts said in a note Sept 14.
Around 793,522 b/d or 43.6% of Gulf of Mexico output remains shut in following Ida, the US Bureau of Safety and Environmental Enforcement said Sept. 13.
The lingering shut-ins are likely to prompt further drawdowns in US crude supply. US commercial crude stocks are expected to have declined 3.5 million barrels to around 420.4 million barrels in the week ended Sept. 13, analysts surveyed by S&P Global Platts said.
Meanwhile OPEC+ in its latest monthly report has forecast oil demand to grow by 4.15 million b/d in 2022, increasing from 3.28 million b/d in last month's report. It now estimates demand to reach 100.83 million b/d for the year, driven by a stronger than expected recovery in fuel demand and a steady economic outlook in all regions.
"WTI crude is on the verge of breaking out back toward the summer highs if US stockpiles continue to decline and if expectations grow for a normal holiday travel season," OANDA senior market analyst Edward Moya said Sept. 14.