Oil prices rose on Friday, on track to post big gains for the week amid concerns about energy supply cuts amid the risk of a hurricane shutting production in the Gulf of Mexico over the weekend.
Energy traders expect that the production cut in the Gulf of Mexico will increase prices. Considering the recent impact of the Delta variant on oil demand, it is thought that OPEC would act decisively and resist increasing production, and crude oil prices would keep climbing.
Brent crude futures rose 98 cents, or 1.4%, to $72.05 a barrel at 0542 GMT, after falling 1.6% on Thursday.
West Texas Intermediate (WTI) crude futures climbed 93 cents, or 1.4%, to $68.35 a barrel, clawing back a 1.4% loss on Thursday.
During the week, Brent is on a bullish path of around 11%, its biggest weekly gain since June 2020. WTI is heading for a weekly gain of around 10%, which will be its strongest rise since August 2020.
Companies are evacuating workers from Gulf of Mexico oil production platforms starting Thursday. Manufacturers such as BHP and BP said they are starting to halt production on Caribbean Sea offshore platforms.
Gulf of Mexico offshore wells account for 17% of US crude oil production and 5% of dry natural gas production. More than 45% of the US’s total refining capacity located along the Gulf Coast.
Stimulated by production returning after a deadly fire on a Mexican oil rig, the market is now being threatened by the hurricane.
The storm, which is expected to be potentially strong and wreak havoc in the Gulf of Mexico and Texas early next week, could cause more immediate market concerns.
On Thursday, prices of oil and other risky assets were also depressed by comments from US Federal Reserve officials that stimulus reduction should continue. This uncertainty is said to persist until a speech by Fed Chairman Jerome Powell on Friday.
Analysts expect moves in the dollar on Friday to be a big factor as markets await Powell’s recommendations to cut bond purchases in the fourth quarter.
