Oil rises 2% from multi-month low on US Gulf output cuts, supply outlook
OIL rose about US$2 a barrel on Tuesday from a nine-month low a day earlier, supported by supply curbs in the US Gulf of Mexico ahead of Hurricane Ian and as the US dollar eased from its strongest level in two decades.
Prices drew support from analyst expectations of possible supply cuts from the Organization of the Petroleum Exporting Countries and allies (Opec+), which is to meet to set policy on Oct 5.
Brent crude settled at US$86.27 a barrel, up US$2.21, or 2.6 per cent.
On Monday it fell as low as US$83.65, the lowest since January. US West Texas Intermediate (WTI) crude settled at US$78.50, up US$1.79, or 2 per cent.
US offshore oil producers said they were keeping an eye on Hurricane Ian’s track as the powerful storm shut-in about 11 per cent of oil production in the US Gulf of Mexico as it barrelled toward Florida.
The outages may only provide a momentary reprieve for oil prices, said Bob Yawger of Mizuho in New York.
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“The barrels will come back pretty soon, I would imagine,” Yawger said, adding that there is a small chance the storm would change paths and force more shut-ins.
After shutting some its offshore crude production, BP said the storm didn’t pose a threat to its Gulf of Mexico assets and it was redeploying workers to oil platforms.
Crude prices had soared after Russia invaded Ukraine in February, with Brent in March coming close to its all-time high of US$147. Recently, worries about recession, high interest rates and dollar strength have weighed.
“Oil is currently under the influence of financial forces,” said Tamas Varga of oil broker PVM.
The US dollar, which eased from a 20-year high, also helped support oil.
A strong dollar makes crude more expensive for buyers using other currencies. The oil price drop in recent months has raised speculation that Opec+ could intervene.
Iraq’s oil minister on Monday said the group was monitoring prices and did not want a sharp increase or a collapse.
“Only a production cut by Opec+ can break the negative momentum in the short run,” said Giovanni Staunovo and Wayne Gordon of Swiss bank UBS.
The market is awaiting the latest US inventory reports, which analysts expect will show a 300,000-barrel increase in crude stocks. The American Petroleum Institute’s report is out on Tuesday at 4.30 pm EDT (2030 GMT). REUTERS
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