Oil futures rose Tuesday, trading at around six-week highs, as Nicholas made landfall on the Texas coast, weakening to a tropical storm, as crude and natural-gas production in the Gulf of Mexico struggles to recover from Hurricane Ida.
West Texas Intermediate crude for October delivery
the global benchmark, was up 33 cents, or 0.4%, at $73.84 a barrel on ICE Futures Europe.
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Tropical Storm Nicholas hit the Texas coast early Tuesday as a hurricane, bringing more than a foot of rainfall to the same area hammered by Hurricane Harvey in 2017 and dumping more water on storm-battered Louisiana. Hurricane Ida made landfall on the Louisiana coast on Aug. 29.
“As a significant part of the U.S. Gulf’s oil and gas machine is still shut, which is a bullish enough event on its own, the prospect of additional production disruptions can only strain supply further and drag prices up as a result of tight market balances,” said Nishant Bhushan, oil markets analyst at Rystad Energy, in a note.
The Bureau of Safety and Environmental Enforcement late Monday had estimated that 43.6% of oil production in the Gulf of Mexico remained shut in, equivalent to 793,522 barrels a day of output. Nearly 52% of natural-gas output, equal to 1,151.01 billion cubic-feet a day of production, was also shut in.
Meanwhile, the International Energy Agency on Tuesday cut its supply rebound forecast for 2021 by 150,000 barrels a day, due in part to storm damage, while also cutting its demand forecast by 100,000 barrels a day, citing the impact of the delta variant of COVID-19.
The monthly report from the Paris-based agency comes after the Organization of the Petroleum Exporting Countries on Monday also trimmed its demand forecast for the third quarter of this year. Unlike OPEC, however, the IEA didn’t lift its 2022 demand forecast. OPEC said a robust economic recovery would see demand grow by 4.2 million barrels a day in 2022, up 900,000 barrels from the cartel’s August estimate.
The IEA expects world oil demand next year to average 99.4 million barrels a day, while OPEC is looking for demand of 100.8 million barrels a day.