More than 80% of oil production in the Gulf of Mexico remains shut in after Hurricane Ida, a U.S. regulator said on Monday, despite more than a week passed after the storm made landfall and hit critical infrastructure in the region.
Energy companies are struggling to resume production as Ida damaged platforms and caused blackouts on land. The Bureau of Safety and Environmental Enforcement said about 1.5 million barrels of oil production per day, or 84%, remained shut down, with 1.8 billion cubic feet of gas output per day, or 81%, going offline.
A total of 99 oil and gas production platforms remain evacuated, down from the 288 originally evacuated.
The U.S. Coast Guard said on Monday it was investigating nearly 350 reports of oil spills in and throughout the U.S. Gulf of Mexico following Hurricane Ida.
Ida’s winds of 150 miles per hour (240 kph) have wreaked havoc on offshore oil production platforms and onshore oil and gas processing facilities. About 88% of the region’s offshore oil production is closed and more than 100 platforms remained empty after the storm made landfall on August 29.
The Coast Guard has been conducting flyovers off the coast of Louisiana looking for spills. It is providing information to federal, state and local authorities responsible for cleaning the sites.
Oil prices were mixed on Tuesday as some investors stepped up bargains after recent losses.
Saudi Arabia’s sharp cuts in crude oil contract prices for Asia added to concerns about a slowdown in demand and put pressure on sentiment.
Brent crude futures for November rose 35 cents, or 0.5%, to $72.57 as of 0654 GMT, after falling 39 cents on Monday.
No WTI price was set for Monday due to the Labor Day holiday in the US. October’s West Texas Intermediate crude was at $69.16 a barrel, down 13 cents, or 0.2 percent, from Friday’s close.
State oil group Saudi Aramco informed customers on Sunday that it will lower its October official selling prices (OSPs) by at least $1 per barrel for all crude grades sold to Asia.
Deep price cuts, a sign that consumption has remained stagnant in the world’s most importing region, have clouded the economic outlook as quarantines imposed across Asia to combat the delta variant of the coronavirus.
Markets are also struggling with the Organization of the Petroleum Exporting Countries and its allies’ decision to increase production by 400,000 barrels per month between August and December.
Brent bounced back as investors adjusted positions, but market sentiment remained weak due to lower demand in Asia and the United States.
For WTI to rise above $70 a barrel, some new positive signals are needed, such as signs of the infection waning or rising demand for jet fuels.
The U.S. economy created the fewest jobs in seven months in August as hiring in the leisure and hospitality sector stalled amid a resurgence in COVID-19 infections, which weighed on demand at restaurants and hotels.
Oil prices are expected to struggle to rise after Monday’s Labor Day, with the summer driving season ending in the US.
Oil prices were bolstered by concerns that US supply would be limited after Hurricane Ida.
Hedge funds bought oil last week at the second-fastest rate this year after Ida disrupted offshore oil wells and onshore refineries in the Gulf.
The increase in daily crude oil imports of China, the world’s largest oil buyer, also provided support. China’s imports rose 8% in August compared to the previous month, as refineries resumed purchases following the release of new import quotas, customs data showed.
China’s exports unexpectedly grew at a faster pace in August thanks to solid global demand, helping take some of the pressure off the world’s second-biggest economy as it navigates its way through headwinds from several fronts.
