The black liquid is bullish today as U.S. Gulf of Mexico producers made slow progress in restoring output after Hurricane Ida.
The Brent is up 1.23%, currently trading $72.57 a barrel while the U.S. West Texas Intermediate (WTI) crude is up 1.27%, currently trading $69.23 a barrel.
Producers in the Gulf are still battling to restart operations after Hurricane Ida swept through the region with powerful winds and flooding. About 80% of U.S. Gulf production remained offline yesterday, with 79 production platforms still not operational. Data from investing.com reveals that about 17.5 million barrels of oil have been lost to the market so far. The Gulf’s offshore wells make up about 17% of U.S. output.
Meanwhile, the U.N. criticized Iran for obstructing an investigation into past activities and jeopardizing important monitoring work, possibly complicating efforts to resume talks on reviving a nuclear deal.
The negotiations between world powers and Iran have been paused for almost three months since the election of a new radical president in Iran, reducing prospects of Tehran being able to resume oil exports.
What they are saying
Commerzbank analyst Carsten Fritsch stated, “Oil prices are continuing to find support from the ongoing high production outages in the Gulf of Mexico.”
ING analysts said in a note that “Refinery operations appear to be making a quicker recovery. Only about 1 million barrels per day (bpd) of capacity was temporarily closed, down from a peak of more than 2 million bpd. However, those refiners that have restarted are unlikely to be operating at full capacity at the moment.”
On Iran, Stephen Brennock of oil broker PVM said, “The Iran factor is therefore likely to be put on the back burner, at least for the time being. Iran is no longer the oil market’s wildcard but expect it to make a comeback in the early part of 2022.”
Investors eyes will be closely watching inventory data from the American Petroleum Institute industry group due later in the day and the U.S. Energy Information Administration tomorrow for a clearer picture of the storm’s impact on crude production and refinery output.