MOSCOW (MRC) -- Crude oil futures were higher in mid-morning trade in Asia Sept. 28 amid bullish fundamentals and supply restrictions, reported S&P Global.
At 10:20 am Singapore time (0220 GMT), the ICE November Brent futures contract was up 22 cents/b (0.28%) from the previous close at USD79.75/b, while the NYMEX November light sweet crude contract was 25 cents/b (0.33%) higher at USD75.70/b.
"The catalyst driving oil prices strength continues to be the bullish demand outlook and near-term constrained supply, leading to a greater-than-expected drawdowns in crude inventories over the past two weeks," IG Market Strategist, Yeap Jun Rong told S&P Global on Sept 28.
Brent prices have also seen to be surging towards the USD80/b mark. ING research analysts have said in a research note on Sept. 28 that given the strength across the energy complex, it is probably only a matter of time before Brent finally breaches USD80/b.
The last time front-month ICE Brent crossed USD80/b intraday was on Oct. 23, 2018, and Brent last settled above that level on Oct. 17, 2018.
Sharing similar sentiment, several analysts have also noted that the global energy crisis could see demand for crude increase if the northern hemisphere experiences a cold winter, with many countries not equipped to cope.
The record level of natural gas prices and insufficient gas reserves in Europe have offered a significant boost on the demand side, leaving oil as a potentially attractive alternative.
Amid the bullish demand outlook, restrictions on the supply side is also providing additional support to the oil complex.
Global supply outlooks have come under pressure as extended production outages in the US Gulf of Mexico have sent US crude inventories sharply lower in recent weeks.
Inventory withdrawals have also been strong across the US, with oil inventories falling to a three-year low of 414,000 barrels. Fuel shortages are widening, putting upward pressure on oil prices, added ANZ research analysts.
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.