Oil settles up as US producers, refiners assess storm damage

Global benchmark Brent settled at US$73.41 a barrel, up 71 cents or 0.98%. Brent touched a session high of $73.69, the highest since Aug. 2. U.S. crude futures rose 47 cents, or 0.68% to $69.21 a barrel. (File pic: Opec logo at Opec HQ.)

NEW YORK: Oil rose on Monday, lifted as U.S. Gulf Coast platforms, refineries and pipelines grappled with uncertainty on restart timelines after Hurricane Ida wreaked havoc on the region.

Gains were capped as OPEC+ looked set to go ahead with a planned oil output increase.

Global benchmark Brent settled at US$73.41 a barrel, up 71 cents or 0.98%. Brent touched a session high of $73.69, the highest since Aug. 2. U.S. crude futures rose 47 cents, or 0.68% to $69.21 a barrel.

Within 12 hours of coming ashore, Ida had weakened into a Category 1 hurricane, and has since dropped to tropical storm status. Hundreds of oil production platforms were evacuated ahead of the storm and nearly all offshore Gulf oil production, or 1.74 million barrels per day, was suspended.

After heavy winds and rains, nearly 1.2 million homes and businesses in Louisiana and Mississippi were without power on Monday and the storm's move inland shifted the oil market's focus to when refiners can restart.

Oil and gas pipeline operators checked for damage. Power utilities warned that customers in the hardest-hit areas could face extended outages.

Exxon Mobil Corp said it was shutting the 520,000 barrel-per-day (bpd) Baton Rouge, Louisiana, refinery units until utilities resume providing power and feedstocks are available.

"We're in wait-and see mode on how badly the refiners will be impacted by the power outages," said John Kilduff, a partner at Again Capital Management in New York. "There's going to be an accounting to be done later this week as damage is assessed - I would give it some time to breathe, like a fine wine," he said.

U.S. gasoline was up more than 1.5%, lending support to crude. Power outages added to refinery closures on the Gulf coast and traders weighed the possibility of prolonged disruptions.

"It's still early days," said Vivek Dhar, analyst at Commonwealth Bank of Australia. "Oil products, like gasoline and diesel, are likely to see prices rise more acutely from refinery outages especially if there are difficulties in bringing refineries and pipelines back online."

Brent has rallied 40% this year, supported by supply cuts by the Organization of the Petroleum Exporting Countries and allies, known as OPEC+, and some demand recovery from last year's pandemic-induced collapse.

OPEC+ meets on Wednesday to discuss a scheduled 400,000 bpd increase in its oil output, in what would be a further easing of the record output cuts made last year.

OPEC delegates say they expect the increase to go ahead, although Kuwait's oil minister said on Sunday it could be reconsidered.- Reuters

Article type: metered
User Type: anonymous web
User Status:
Campaign ID: 46
Cxense type: free
User access status: 3
Join our Telegram channel to get our Evening Alerts and breaking news highlights

Oil price , Brent , oil , West Texas Intermediate , WTI , Opec+ , demand , pandemic ,


Next In Business News

US posts weakest growth of pandemic recovery on supply woes
Top Glove cuts targeted Hong Kong listing proceeds again, to US$473mil
Drilling business lifts Icon Offshore Q3 earnings
EP Manufacturing appoints two new directors
UOB Malaysia provides financing to Ericsson Malaysia
Bursa Malaysia ends lower
Warrant of arrest Issued against ex-CEO of Transmile
PMB Investment targets RM10-15mil fund size for Shariah Global Equity Fund by year-end
Shell sets tougher climate targets, Q3 profit below expectations
Bank Pembangunan, MDEC collaborate to catalyse Malaysia's digital economy growth

Others Also Read