Oil specialists and analysts expected the continuation of price gains for crude oil this week, after prices closed last week’s trading with the largest weekly gain in a year, due to fears surrounding the American hurricane and its strong impact on disrupting a large part of oil supplies from the Gulf of Mexico coast.
They explained to Al-Eqtisadiah that prices are likely to continue gains after news of a high probability that the group of producers in the “OPEC +” alliance will refrain from pumping the previously scheduled monthly increase in production, which amounts to 400 thousand barrels per day due to high infections from the delta variable of the Corona virus, during The ministerial meeting is expected next Wednesday.
They stated that American oil and gas producers rushed to shut down production in the US Gulf of Mexico due to the escalation of fears of Hurricane Ida, noting that the volume of closures amounted to more than 90 percent of Gulf crude and 85 percent of natural gas production.
The specialists pointed out that the low levels of supply were the main reason for the jumps in the prices of crude oil and refined products, including the prices of gasoline and jet fuel at the end of last week.
In this context, Ross Kennedy, managing director of QHI Energy Services, said that crude oil prices are likely to continue the sharp rise due to the American hurricane crisis, which disrupted about 90 percent of oil supplies due to it being one of the highly dangerous hurricanes. Noting that the Gulf of Mexico region is one of the most important regions for energy resources and infrastructure in the United States.
He stated – according to US statistics – that the production of offshore oil in the Gulf of Mexico represents 17 percent of the total production of the United States, and the production of crude oil and marine natural gas in the Gulf represents 5 percent of the country’s total production, explaining that more than 45 percent of the total production in the United States. US oil refining capacity is located along the Gulf Coast, reflecting the broad impact of production disruptions in this region on global supply.
For his part, Damir Tesperat, director of business development at the International Technic Group, believes that crude oil prices are on the way to reap greater gains and at a faster pace, after positive economic signals overcame the ongoing demand concerns associated with the spread of the variable delta from the Corona virus.
He explained that the hurricane crisis is temporary, but the market in general is in a better position, as US government data indicates continued economic growth, a rise in domestic product and consumer spending during the second half of this year, which provides a positive outlook for future energy demand, in addition to the weakness of the dollar, which provides more energy. Support for crude oil prices.
In turn, Peter Bacher, an economic analyst and a specialist in legal affairs for energy, stated that the positive factors return to the predominance in the oil market, where morale rises and the atmosphere of confidence returns despite the continuation of the epidemic crisis, pointing to the rise in West Texas Intermediate crude prices by 39 percent, equivalent to $ 19 a barrel. From the beginning of the year until this month.
He pointed out that the shrinking oil stocks played a major role in the rise in crude oil prices last week, as stocks recorded 6 percent less than the average of the five years for this time of the year, while the gains were curbed by the increase in the number of American drilling rigs and a decline in demand for jet fuel. As the summer months come to an end.
For her part, Arvi Nahar, a specialist in oil and gas affairs at African Leadership International, indicated that the full adoption of the “Fierz-Pointek” vaccine and the willingness of Moderna to obtain the same approval from the US Drug Administration enhance expectations of the spread of vaccines, and then the recovery of global demand that may face Deflationary pressures as the summer driving season approaches its end, in addition to an increase in refinery consumption to its highest level since late June.
Arvi indicated that in the United States, she strongly notes a case of ignoring the risks of the “delta” variable, despite the increasing cases in some parts of the country. The “OPEC +” group increased the supply to ease the rise in gasoline prices, during the meeting of the group’s energy ministers this week.
On the other hand, with regard to prices, at the end of last week, oil prices rose 2 percent, on Friday, achieving the largest weekly gain in more than a year, as energy companies began stopping American production in the Gulf of Mexico before a major hurricane is expected to strike early next week.
Brent crude futures rose $1.63, or 2.3 percent, to settle at $72.70 a barrel, while US West Texas Intermediate crude rose $1.32, or 2 percent, to a settlement price of $68.74.
This is the highest closing for Brent since August 2, and for West Texas Intermediate since the 12th of the same month, and on a weekly basis, Brent rose more than 11 percent, and West Texas Intermediate rose more than 10 percent, which is the largest weekly percentage gain for both. Since June 2020.
“Energy traders are pushing crude oil prices higher in anticipation of production disruptions in the Gulf of Mexico and in light of growing expectations that OPEC + may curb production increases given the recent impact of the Delta strain on crude demand,” said Edward Moya, chief market analyst at OANDA.
Baker Hughes Energy Services said that US oil rigs rose from five to 410, the highest level since April 2020, after energy companies added 25 oil rigs, the largest number in a month since January, raising the number of oil rigs. Excavators 12 months in a row for the first time since July 2017.
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