Oil specialists and analysts expected the continuation of gains in crude oil prices this week, after prices ended last week’s trading on an upward trend, which pushed Brent crude to a level of $73 a barrel, following the continued disruption of American oil supplies due to the repercussions of the powerful Hurricane Ida, which oil facilities need to Some time to recover from its damage.
The specialists explained that the US-Chinese rapprochement after making contact between the two heads of state boosted hopes in the market that the economic and trade disputes between the two countries would recede and increase expectations for a broader global economic recovery in the coming period, especially with the decline in fears of the epidemic in China and the United States and the success of efforts to spread vaccines and contain the repercussions of a variable Delta.
They told Al-Eqtisadiah that the return of US production is still slow, so far, 185,000 barrels per day of oil production have returned in the American Gulf, where progress is being made in recovering from Hurricane Ida and leads to gaining some momentum in the market, but on the other hand, there is still Nearly two-thirds of oil quantities in the Gulf and three-quarters of natural gas production are idle, according to US data.
The specialists pointed out that the inhibiting factors for price gains also include China’s announcement of plans to sell the government’s crude reserves in stages through a public auction, which reinforces expectations of renewed abundance of supply despite the decline in US production and the limited increase by oil producers in the “OPEC +” group.
In this context, Ross Kennedy, managing director of QHA Energy Services, says, “Prices are closer to achieving gains this week due to the crisis of production interruption due to the hurricane, but this does not prevent some price fluctuations, and this depends largely on The content of the two monthly reports of the Organization of the Petroleum Exporting Countries and the International Energy Agency, which will be issued today and tomorrow.
He indicated that if the International Energy Agency adheres to a previous vision about the stumbling in demand as a result of the pandemic crisis, this will put pressure on prices again, and that the “OPEC” report is likely to reduce demand expectations in the coming months after the end of the driving season and a relative decline in movement and travel in the coming period. .
Damir Tesperat, director of business development at the international company “Technic Group”, believes that the American production interruptions have a wide impact on the market, and that the monthly increase of the “OPEC +” group is very limited and does not exceed 400,000 barrels per day, explaining that many contracts of major energy companies such as Shell suffered extensive damage from the hurricane, while Chevron restored production to a limited extent.
He stated that many dealers and traders in crude oil are still worried and await developments in the market situation in the next few weeks, as they look forward to more details about the date of the return of US production and the timing and how to resume production in US refineries at full capacity.
For his part, Peter Bacher, an economic analyst and specialist in energy legal affairs, says, “Hurricanes are among the most significant challenges facing US production and serve as a test of the resilience of oil and gas facilities and offshore pipelines.”
He explained that Hurricane Ida was one of the most powerful hurricanes and shut down up to 95 percent of oil production in the US Gulf of Mexico, and the offshore oil and gas infrastructure was severely damaged by the storm.
For her part, Arvi Nahar, a specialist in oil and gas affairs at African Leadership International, believes that the reports of “OPEC” and the International Energy Agency are subject to anticipation and follow-up by all industry parties this week, especially with regard to evaluating the expectations of demand for crude oil in the coming period, and energy ministers meet in The “OPEC +” group, early next month, to discuss the situation of supplies and demand data, with the start of the winter season in the northern hemisphere.
She added, “The possibility of progress and a strong improvement in trade relations between the United States and China boosted market sentiment in an optimistic way, and gave a strong boost to demand for high-risk assets, but in return, fears of an abundance of supply are renewed after news of China’s release of Much of the crude oil is from its strategic reserves, which outweighs the widespread contraction in US supplies.”
On the other hand, with regard to prices at the close of last week, oil rose on Friday and for some time exceeded $ 73 a barrel, supported by increasing indications of supply cuts in the United States due to Hurricane Ida, and with the higher-risk assets receiving a boost from hopes related to trade between the United States and China.
More than two-thirds of oil production in the US Gulf of Mexico, or 1.2 million barrels per day, has been shut down since mid-August because of the hurricane. Brent crude rose $1.47, or 2.3 percent, to $72.92. The session peak was at $73.15 a barrel.
US West Texas Intermediate crude rose $1.58, or 2.3 percent, to $69.72. The two stocks recorded small gains during the week. Brent is up 41 percent this year thanks to production cuts by the Organization of the Petroleum Exporting Countries (OPEC) and some recovery in demand from the pandemic.
Oil and stock markets also received support from news of a phone call between Chinese President Xi Jinping and US President Joe Biden, which raised hopes for improved relations and more global trade, according to analysts.
“The United States increased the number of oil rigs in the latest week,” Baker Hughes Energy Services said, indicating that production could rise in the coming weeks.
The focus next week will be on revisions to the 2022 oil demand forecasts from OPEC and the International Energy Agency. Two sources from “OPEC +” said, “It is likely that the Organization of the Petroleum Exporting Countries will downgrade its forecast on Monday.”
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