Oil prices slipped on Friday as more supply got back online in the U.S. Gulf of Mexico following two hurricanes. Still, both benchmark contracts were on course for weekly gains of higher than 3% as recovery in production is seen staggering demand.
Brent crude futures dropped 35 cents, or 0.5%, over $75.32 per barrel at 0646 GMT, deleting Thursday’s 21 cent gain.
After ending unchanged in the past session, U.S. West Texas Intermediate (WTI) crude futures were under 42 cents, or 0.6%, to $72.19 per barrel.
According to Edward Moya, senior market analyst at OANDA, oil prices are somewhat softer as offshore U.S. production proceeds to recover slowly, and as a return to standard over large parts of Asia hit some road bumps, and as some countries still fight to contain the delta variant (of the COVID-19) spread.
Both contracts were on track to score more than 3% for the week as production in the U.S. Gulf of Mexico has increased more gradually than predicted following Hurricane Ida disabled plants in August and tropical storm Nicholas hit this week.
Moya said that crude prices are having another great week, notwithstanding broad vulnerability over commodities that originated from a rebounding U.S. dollar.
On Friday, the dollar rose to a three-week high, making dollar-traded crude imports more costly for countries using other currencies.
As of Thursday, nearly 28% of U.S. Gulf of Mexico crude production continued offline, two-and-a-half weeks following Hurricane Ida hit.
Commonwealth Bank commodities analyst Vivek Dhar said that it’s still taking longer than people believed about coming back. That’s been a supportive part of the market.
We’re continuing to go into more (supply) deficiency positions – that unquestionably seems to be the view.
Preliminary data from the U.S. Energy Information Administration revealed U.S. crude shipping in September has moved to 2.34 million bpd and 2.62 million bpd from 3 million bpd in late August.
Dhar also guided to data from the International Energy Agency this week conferring OECD oil inventories dropping to a low in November, betokening that the improvement in fuel demand is anticipated to outpace supply.