Oil fell on expectations for demand to fall after Hurricane Ida shuttered refiners on the U.S. Gulf Coast, and as producing nations in OPEC+ set to fulfill calling for suppliers to pump more crude. Brent crude futures for October, because of expire on Tuesday, fell 39 cents, or 0.5%, to $73.02 a barrel by 11:08 HRS yesterday. U.S. West Texas Intermediate (WTI) crude futures were down 43 cents, or 0.6%, at $68.78.
Both benchmarks were heading in the right direction for his or her first monthly loss since March but were still shortly from their July highs, when Brent rose to its strongest since 2018 and U.S. crude since 2014.
Hurricane Ida, which made landfall within the US on Sunday as a Category 4 hurricane, knocked out a minimum of 94% of offshore Gulf of Mexico oil and gas production and caused "catastrophic" damage to Louisiana's grid. Prices were pressured by concerns that power outages and flooding in Louisiana after Hurricane Ida will cut crude demand from refineries.
About 1.7 million bpd of offshore boring was shut, but that output may resume more quickly than many refining operations along the Gulf that lost power and have limited access. Analysts at FGE said in a very Tuesday note they expect roughly three-quarters of offshore output to resume by the top of the week.
OPEC and allied producers in OPEC+ had agreed to feature 400,000 barrels per day (bpd) to monthly supply until the top of December. Sources told Reuters the group is probably going to take care of that plan despite U.S. pressure for more output. "It appears like sticking to the plan from the last meeting," an OPEC+ source told Reuters. OPEC's own data showed the market will face a deficit until the top of 2021 then again flip into a surplus in 2022.
The Colonial Pipeline - the most important U.S. pipe to the geographic area - restarted its main gasoline and distillate lines after shutting prior to the storm, but loss of power within the region could prevent refining capacity from returning.
