Oil prices recorded a limited gain of more than 2% during the week ending Sept. 17 amid oil supply disruptions in the US Gulf of Mexico, optimistic demand projections for next year and a more-than-expected drop in US stockpiles.
International benchmark Brent crude traded at $75.34 at 1219 GMT on Friday, posting more than a 2.57% gain from Monday when trade at 0732 GMT registered at $73.45 per barrel.
American benchmark West Texas Intermediate (WTI) traded at $72.12 at the same time on Friday, increasing over 2.63% relative to $70.27 a barrel on Monday.
Oil prices started the week on a bullish sentiment due to oil supply disruptions in the US Gulf of Mexico where almost half of the production was offline following Hurricane Ida. Experts predict that it may take weeks for production in the region to return to normal.
On Tuesday, concerns over oil supply disruptions renewed in the US Gulf of Mexico after a new tropical storm, Nicholas, gathered strength and threatened oil production in the region. However, the tropical storm only caused minor damage to the country's oil production and infrastructure.
Exerting upward pressure on prices, both the Organization of Petroleum Exporting Countries (OPEC) and the International Energy Agency (IEA) in their monthly reports published this week revised up their global oil demand estimates for next year.
According to OPEC, global oil demand for 2022 is forecast to reach pre-pandemic levels of up to 100.8 million barrels per day (bpd), increasing by 4.15 million bpd year over year. The IEA projected that global oil demand would increase by 3.2 million bpd in 2022 to reach 99.4 million bpd.
'Despite the weak 3Q21 demand, the latest news on the Covid front is more optimistic, with global cases falling in recent weeks, continued progress in vaccine manufacturing and inoculations, and less restrictive social distancing measures in many countries,' the IEA said.
- More-than-expected drop in US stockpiles push prices up
According to weekly data released by the Energy Information Administration (EIA) late Wednesday, US commercial crude oil inventories dropped by 6.4 million barrels, or 1.5%, to 417.4 million barrels during the week ending Sept. 10, compared to the market expectation of a 3.9 million-barrel draw.
Gasoline inventories also fell by 1.9 million barrels to 218.1 million barrels over that period. A significant drop in inventories indicates an increase in crude demand in the US, the world’s largest oil consumer, assuaging market concerns over dwindling demand.
Although registering above $75 per barrel during the week, prices ended the week on a lower note, as a US strong dollar, which hit a three-week high on Friday, offset US supply disruptions due to Hurricane Ida.
By Ebru Sengul Cevrioglu