Crude oil prices rose to near six-week highs on Monday as U.S. output remains slow to return two weeks after Hurricane Ida slammed into the Gulf Coast and worries another storm could affect output in Texas this week. This gives hope to Nigeria as its bulk of revenue comes from crude oil sales. Those gains came even though the Organization of the Petroleum Exporting Countries trimmed its world oil demand forecast for the last quarter of 2021 due to the Delta coronavirus variant. OPEC said a further recovery would be delayed until next year when consumption will exceed pre-pandemic rates.
Brent futures rose 53 cents, or 0.7%, to $73.45 a barrel, while U.S. West Texas Intermediate crude rose 71 cents, or 1.0%, to $70.43. That puts Brent on track for its highest close since Aug. 3 and WTI on track for its highest close since July 30. “Hurricane Ida’s impact is lasting more than the market expected and as some oil production capacity remains shut this week, prices are rising on supply not being restored and therefore not reaching refineries that have restarted operations quicker than producers,” Nishant Bhushan, oil markets analyst at Rystad Energy.
Further disruption from bad weather could be around the corner, with the U.S. National Hurricane Center projecting Tropical Storm Nicholas will remain a storm as it scrapes along the South Texas coast on Monday and makes landfall near Corpus Christi later tonight. In addition to the OPEC forecast, other bearish factors also held back oil price gains on Monday, including persistent worries about coronavirus on global crude demand, potential supply increases from planned releases of oil from strategic reserves in the United States and China, and the possibility Iran could be moving closer to selling oil to the world again.
A city in China’s southeastern province of Fujian has closed cinemas and gyms, sealed off some entries and exits to highways and told residents not to leave town as it battles a local COVID-19 outbreak. Traders noted China’s planned release of oil from strategic reserves could boost supplies available in the world’s the second biggest oil consumer. The U.S. government agreed to sell crude oil from the nation’s emergency reserve to eight companies including Exxon Mobil, Chevron and Valero , under a scheduled auction to raise money for the federal budget. Hopes of fresh talks on a wider nuclear deal between Iran and the West were raised after the United Nations atomic watchdog reached an agreement with Iran on Sunday about the overdue servicing of monitoring equipment to keep it running.