Major disruption to US production in Gulf of Mexico raises oil prices by 1.7%


Crude oil prices rose yesterday by more than 1.5 per cent, as prices received support from a major disruption in US production in the Gulf of Mexico due to two hurricanes, as well as OPEC + efforts to restrict oil supply and improve compliance with production cuts.
He told Al-Eqtisadiah, specialists and oil analysts, that the high oil prices came due to the disruption of production as a result of two storms approaching the American Gulf coast, which provided good support for prices in the face of severe downward pressures that continued over several months due to the rapid spread of the Corona pandemic.
The specialists explained that the storms “Marco” and “Laura” may push the refineries to close, as well as affect the demand, and may cause damage to the American energy sector exceeding billions of dollars, at a time when the sector faces many burdens, most notably weak prices, shrinking drilling activities, high indebtedness and bankruptcy Companies.
Sevin Schimmel, director of the German “VG Industry” company, said that the two storms exacerbated the market’s troubles, but provided support for prices at a precise time when the market needed to face downward pressures resulting from weak demand and abundant supply, noting that sentiment is gradually improving, especially with the decline in trade tensions. Between the United States and China and the latter’s return to buy American oil at good levels, consistent with the two countries’ agreement last January.
He added that the factors supporting prices also include the success of the “OPEC +” agreement in restricting supply, improving the level of producers’ compliance with production cut quotas, and providing a good view of the recovery of demand during the second half of this year, pointing to a gradual rise in US crude futures this month amid a steady decline. The level of stocks of crude oil and gasoline.
For his part, Robin Noble, director of the International Consulting Company, Oxyra, said that the previous state of gloom is fading in the market due to improved indicators and the presence of tentative signs of a return to pre-pandemic levels of demand, which encouraged the return of stalled US production during the previous price decline, as the activities of American drilling to add ten new rigs last week, in the first good recovery of production during the current year, which witnessed the most difficult and dangerous waves of recession and downturn in the industry.
He pointed to the estimates of international analysts confirming that the next three days will accurately determine the size of the impact of the two storms on the crude oil market by monitoring the size of losses in the Gulf of Mexico refineries, and the impact of the two storms on the refining activity and oil production in the United States is not only physical, but also psychological. The effects of their time duration are longer.
For his part, Marcus Krug, senior analyst for the oil and gas research company, A Control, said that Saudi Aramco’s correct decision to establish a new administrative organization for institutional development in order to improve the company’s portfolio is a very positive development and reflects the correct vision of the largest oil producing company in the world in dealing with Economic variables and adjustments to low crude prices and the development of new methods to enhance liquidity.
He mentioned that the positive factors supporting prices are many, and perhaps the most prominent of which is international reports expecting a decrease in US commercial crude stocks by 4.3 million barrels to 508.2 million barrels, which will represent the fifth consecutive week of decline, making it the longest period of decline in a year, which in turn reflects the success of the alliance plan. OPEC + “in a gradual restoration of balance in the market by restricting supply and increasing the pace of withdrawal of stocks to absorb the surplus, which presses strongly on the market and has prevented prices from recovering in the past months.
In turn, the Chinese energy analyst Xuei Sahi said that oil traders are in a state of anticipation for the consequences of the hurricanes and the size of the losses they cause, especially with the disruption of more than half of the refineries’ activity, noting that the developments of the hurricane situation attracted the attention of the American market after the eyes were focused on the return of the high number American drilling rigs and also continuing concerns related to the Corona pandemic.
She explained that the bleeding of economic losses continues in light of fears of the second wave of the epidemic and the tendency of a number of economies to return to closures to control new cases of the epidemic, which exacerbates the downward pressure on demand, despite OPEC and the International Energy Agency presenting a positive and optimistic view of the demand expectations in the period. The upcoming, but the increasing cases of Coronavirus in Europe and Asia continue to weigh on market expectations for a rapid recovery in energy demand in the short term.
With regard to prices, oil rose yesterday, while dealers are studying the impact of a large part of production being halted on the coast of the United States in the Gulf of Mexico due to tropical cyclones Marco and Laura, in exchange for the increase in Corona cases in Asia and Europe. According to “Reuters”, Brent contracts recorded at the settlement of $ 45.86 a barrel, up 73 cents, or the equivalent of 1.62 percent. While US crude futures rose 73 cents, or 1.71 percent, to settle at $ 43.35 a barrel.
“The increase in the number of American rigs last week and the disparity in the data on Corona injuries had a limited negative impact on oil this week, thanks to a possible disruption due to two separate hurricanes heading to the American coastal region on the Gulf,” said Stephen Ince, chief global market expert at AxiCorp. “.
Energy companies have reduced production at refineries on the coast of the Gulf of Mexico in the United States after closing 82 percent of offshore crude oil production in the region, as the rare blow of two hurricanes on major oil-producing areas in the United States threatens to bring heavy rains for several days and strong winds this week.
Producers have halted oil production of more than 1.5 million barrels per day on the coast of the Gulf of Mexico, which represents about 14 percent of total US production.
A Reuters poll showed yesterday that US crude stocks are likely to have declined for the fifth week in a row, while stocks of refined products also fell last week.
On the other hand, the OPEC basket of crude rose to $ 45.19 a barrel yesterday, compared to $ 44.92 a barrel the day before.
The daily report of the Organization of Petroleum Exporting Countries (OPEC) said yesterday that the price of the basket, which includes the average prices of 13 crude produced by the member states of the Organization, achieved the first rise after a previous decline, and that the basket gained about less than one dollar compared to the same day last week. It recorded 44.94 dollars per barrel.


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