MOSCOW (MRC) -- Crude oil futures were higher in mid-morning trade in Asia trade Sept. 27 amid bullish demand outlook and supply tightness, reported S&P Global.
At 10:05 am Singapore time (0205 GMT), the ICE November Brent futures contract was up 1.14 cents/b (1.46%) from the previous close at USD79.23/b, while the NYMEX November light sweet crude contract was 1.12 cents/b (1.51%) higher at USD75.10/b.
"Supply tightness continues to draw on inventories across all regions," said ANZ research analysts on Sept. 27, adding that the rally in the natural gas price improved the price parity for oil to produce power, which is exerting upward pressure on oil.
Concerns remained over tightness in energy markets, particularly for natural gas, as the gas market continues to trade at elevated levels amid tight supply going into winter.
"These higher gas prices will lead to some gas to oil switching, which would be supportive of oil demand. This stronger demand coupled with supply losses in excess of 30 million barrels from the US Gulf of Mexico due to Hurricane Ida suggest a tighter than expected market," said ING market analysts in a note Sept. 27.
The US Bureau of Safety and Environmental Enforcement reported Sept. 23 that around 294,414 b/d, or 16.18%, of the Gulf's oil production remained offline post-Ida. Despite the proportion of offline production easing, full production recovery is not expected until early 2022, with Shell reporting extensive damage to its infrastructure.
Meanwhile, market watchers will track the OPEC+ meeting, which is scheduled to have on Oct. 4 to discuss about the strength in energy markets. In the previous meeting on Sept. 1, OPEC+ alliance agreed to stick with its existing plan to release 400,000 bpd to the market in October.
As informed earlier, Shell said earlier this month 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 then it was 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.
MRC