MOSCOW (MRC) -- Crude oil futures were higher in midmorning Asia trade Sept. 10 with the outlook tightened by supply disruptions in the US Gulf Coast following Hurricane Ida, reported S&P Global.
At 11:15 am Singapore time (0315 GMT), ICE November Brent futures was 29 cents/b (0.41%) higher at USD71.74/b while the NYMEX October WTI contract was up 22 cents/b (0.32%) at USD68.36/b.
"The impact from Hurricane Ida will continue to linger for some time," ING research analysts said Sept 10, adding that total crude oil production losses as a result of the storm now amount to slightly more than 22 million barrels, and with output still struggling to recover, this would grow.
Loading disruptions and supply issues due to Hurricane Ida have likely contributed to the week-on-week decrease in supply, with a few terminals, including Louisiana's Offshore Oil Port, shut following the storm.
As of Sept. 9, 1.392 million b/d, or 76.5%, of US Gulf of Mexico crude oil production remained offline, according to the US Bureau of Safety and Environmental Enforcement
Despite the uptick in prices, uncertainties loomed as the market came under renewed pressure. China announcement Sept. 9 that it will release a part of its state oil reserves through public auction to offer domestic refiners relief from high feedstock costs.
Throughputs at China's independent refineries in eastern Shandong province have continued to fall in August due to maintenance works and cuts earlier in the month amid weak margins, according to S&P Global calculations based on data from JLC. The combined throughput comprising crude, bitumen blend and fuel oil fell to a 17-month low of 9.45 million mt in August, according to JLC data Sept. 9.
In inventory news, the total US commercial crude stocks declined 1.53 million barrels in the week ended Sept. 3 to 423.87 million barrels, according to the Energy Information Administration on Sept. 9, leaving them around 6% behind normal for this time of the year. Total motor gasoline inventories decreased 7.2 million barrels last week and are about 4% below the five-year average for this time of the year.
The EIA in its September Short-Term Energy Outlook released Sept. 8 have also said that growing concerns about the spread of the delta variant have fostered continued declines in oil prices. Sharing a similar sentiment, ANZ analysts said demand in the aviation sector looked bearish with US airlines warning of slowing growth. United, Southwest and other airlines have said that a surge in COVID-19 cases is likely to hamper their recovery, with customer bookings slowing recently.
As informed earlier, Shell said it observed damage from Hurricane Ida to its transfer station West Delta-143 offshore facilities in the Gulf of Mexico. West Delta-143 serves as the transfer station for all production from its assets in the Mars corridor in the Mississippi Canyon area of the Gulf of Mexico to onshore crude terminals. Shell said it is not yet safe to send personnel offshore to learn the full extent of the damage and estimate the effect on production.
We remind that in late August, 2021, US crude stocks dropped sharply while petroleum products supplied by refiners hit an all-time record despite the rise in coronavirus cases nationwide, the Energy Information Administration said. Crude inventories fell by 7.2 million barrels in the week to Aug. 27 to 425.4 million barrels, compared with analysts' expectations in a Reuters poll for a 3.1 million-barrel drop. Product supplied by refineries, a measure of demand, rose to 22.8 million barrels per day in the most recent week. That's a one-week record, and signals strength in consumption for diesel, gasoline and other fuels by consumers and exporters.
We also remind that US crude oil production is expected to fall by 160,000 barrels per day (bpd) in 2021 to 11.12 million bpd, the US Energy Information Administration (EIA) said in a monthly report, a smaller decline than its previous forecast for a drop of 210,000 bpd.