Oil futures moved higher Monday, finding support on concerns about output in the Gulf of Mexico in the aftermath of Hurricane Ida.
West Texas Intermediate crude for October delivery
the global benchmark, was up 77 cents, or 1.1%, at $73.69 a barrel on ICE Futures Europe.
“WTI is starting the week on the front foot, climbing above the $70 level for the first time in over a week. These gains in the price of oil happen as concerns grow over U.S. production, following the damage caused by Hurricane Ida to infrastructure in the Gulf of Mexico, which has seen output drop by about 1.4 million barrels a day since late August,” said Ricardo Evangelista, senior analyst at ActivTrades, in a note.
Gulf of Mexico output has been slow to come back after Ida made landfall on the Louisiana Gulf Coast on Aug. 29. The Bureau of Safety and Economic Enforcement on Sunday evening said 48.6% of Gulf of Mexico oil output, equal to 883,000 barrels a day of production, remained shut in. The BSEE estimated 51.4% of natural-gas output in the Gulf was also shut in.
“Meanwhile, the consensus, despite the uncertainty caused by the growing number of coronavirus cases, is that oil demand will continue to increase in the run-up to the end of the year, in a dynamic that could support further increases in price,” Evangelista said.
Oil remained higher after the Organization of the Petroleum Exporting Countries boosted its forecast for growth in crude demand next year. OPEC now expects demand to grow by 4.2 million barrels a day next year, up nearly 900,000 barrels a day from its September forecast (see table below).
World oil demand is estimated at 100.8 million barrels a day in 2022, exceeding pre-pandemic levels, OPEC said.