MELBOURNE – Oil prices rose on Wednesday, paring overnight losses, with producers in the US Gulf of Mexico struggling to restart operations nine days after Hurricane Ida swept through.
US West Texas Intermediate (WTI) crude futures rose 27 cents, or 0.4 percent, to $68.62 a barrel, after sliding 1.4 percent on Tuesday following the Labor Day holiday.
Brent crude futures inched up 14 cents, or 0.2 percent, to $71.83 a barrel, after falling 0.7 percent on Tuesday.
“The market is … weighing up the impact of ongoing delays to the resumption of operations in the Gulf of Mexico,” ANZ Research analysts said in a note.
About 79 percent of US Gulf production remained offline on Tuesday, with 79 production platforms still unoccupied more than a week after Hurricane Ida made landfall. About 17.5 million barrels of oil has been lost to the market so far.
The Gulf’s offshore wells make up about 17 percent of US output.
Traders will be closely watching inventory data from the American Petroleum Institute industry group due on Wednesday and the US Energy Information Administration on Thursday for a clearer picture of the storm’s impact on crude production and refinery output.
Analysts polled by Reuters expect, on average, that crude stocks dropped by 3.8 million barrels in the week to Sept. 3, and see gasoline stocks down by 3.6 million barrels and distillates down by 3 million barrels.
Oil prices fell on Tuesday in a widespread commodity sell-off as the US dollar jumped on worries about rising COVID-19 cases in the United States and Asia potentially slowing growth.
US imports of gasoline and blending components from Europe and the Baltics are expected to hit about half a million tons this week, the highest since late May, preliminary Vortexa data showed, as Hurricane Ida slashed refinery processing in the US Gulf energy hub.
Imports along the route in the week ending Sept. 5 reached around 426,000 tons, data from the oil analytics firm showed.
The sharp increase in flows is to a large extent due to the production outages that Hurricane Ida caused when it hit the Gulf of Mexico region about a week ago.
Five refineries in Louisiana remained shut on Monday, accounting for about 1 million barrels-per-day of refinery capacity, or about 6 percent of the total US operable refining capacity, the Department of Energy said.
Three refineries in the Baton Rouge area and one near New Orleans have begun to restart, accounting for 1.3 million bpd of refining capacity, the DOE said.
However, the refiners will not produce at full rates for several days. – Reuters
