Specialists and officials in energy companies expected crude oil prices to continue their price fluctuations this week, after they ended last week in a decline, but they gained on a weekly basis for the fourth consecutive week, as Brent crude rose 3.3 percent and US crude rose 3.2 percent.
Prices are gaining strong support from the decline in US inventories, the continued disruption of oil facilities in the United States due to Hurricanes Ida and Nicholas, and the continued recovery of demand in light of strong data on oil imports in both China and India.
The specialists explained that the opposite pressures that curb price gains are represented in the increase in supply from the “OPEC +” group by about 400,000 barrels per day on a monthly basis, and the return of Libyan production to normal levels after a period of disruption due to protests and a partial return of American oil supplies.
They stated that “OPEC” estimates of the oil market situation, according to the last monthly report, broadcast a state of optimism and bullish sentiment, as “OPEC” expected that global demand in 2022 will increase by 4.2 million barrels per day to 101 million barrels per day, which is higher than pre-existing levels. The pandemic, while “OPEC” left its demand forecast for 2021 unchanged at 96.6 million barrels per day.
They pointed out that fears of the repercussions of the spread of the “delta” variable from the Corona virus are strongly heading towards receding, which explains the successive weekly gains of crude oil for the fourth consecutive week, as the market continues to adapt and deal calmly with the fact that the new, fast-contagious variable is spreading.
In this context, Ross Kennedy, managing director of QHI Energy Services, said that price fluctuations still dominate the market due to doubts about the pace of the return of US supplies against positive estimates of demand issued last week by OPEC and the International Energy Agency. The price hikes are the closest to dominating the market in the coming days.
For his part, Damir Tesperat, director of business development at the international company “Technic Group”, believes that the supply is shrinking due to bottlenecks in American production, while demand is growing with the spread of vaccines and the decrease in new infections in the epidemic, but in return we find new negative pressures on prices after China provided some indications. The downward trend in light of its dwindling economic growth and with its government’s decision to release 7.4 million barrels of its strategic petroleum reserves in response to the interruption of oil supplies from the United States.
He stated that China is trying to calm the pace of rising prices, which is exacerbating inflationary pressures on consumer countries mainly, but the sale of Chinese stocks may not limit the price rise much, especially after India – the third largest oil importer in the world – witnessed a strong economic recovery, as well. Significantly decreased coronavirus cases and deaths there.
Peter Bacher, an economic analyst and a specialist in legal affairs for energy, added that crude oil prices may continue the march of gains this week with limited rebounds, especially if the level of US oil stocks continues to shrink, pointing to a decrease in commercial oil stocks by 6.4 million barrels last week, while looking forward The market to new lows may exceed 2.5 million barrels.
He pointed out that the rise of the dollar curbs crude oil prices according to the inverse relationship between them, and that the fluctuating US economic data last week did not contribute to supporting crude oil prices, as US stock market indices partially declined and market data in China declined.
In turn, Arvi Nahar, an oil and gas specialist at African Leadership International, said that demand witnessed widespread pressure in US refineries last week due to storms and the end of the driving season, but US demand is still high by about 17 percent on an annual basis compared to 2019 levels. .
She indicated that the continued interruption of American supplies due to Hurricane Ida was the main reason behind the disruption of the market, as no one in the market expected such a long repercussions due to the hurricane, which extended for three weeks, which led to continued disruptions in production, but capital discipline remained the focus. base for US operators.
On the other hand, with regard to prices, at the end of last week, oil prices fell on Friday as energy companies in the Gulf of Mexico region in the United States resumed production, after two successive hurricanes in the region halted production.
Brent crude futures fell 33 cents to settle at $75.34 a barrel. US West Texas Intermediate crude futures fell 64 cents to settle at $71.97 a barrel. Over the course of the week, “Brent” rose 3.3 percent, and US crude rose 3.2 percent, supported by tight supplies caused by the hurricane’s supply disruption. Friday’s decline came after five consecutive sessions of gains for Brent crude.
On Wednesday, Brent hit its highest level since late July, and US crude hit its highest level since early August. Crude oil exports flowed back from the Gulf Coast again after Hurricanes Nicholas and Ida drained 26 million barrels of offshore production.
Reuters reported Thursday that the resumption of activities continued with the suspension of about 28 percent of American crude production in the Gulf of Mexico. This week, US energy companies added oil and natural gas rigs for the second week in a row, although the number of offshore units in the Gulf of Mexico remained unchanged, after Hurricane Ida hit the coast more than two weeks ago.
Energy services company Baker Hughes said 14 offshore rigs in the Gulf of Mexico were closed two weeks ago due to the continuing shutdown caused by IDA, and last week, four offshore rigs returned to service. Baker Hughes noted that the number of oil and gas rigs, an early indicator of future production, rose by nine to 512 in the week ending September 17, the highest level since April 2020.
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