Price gains of 3% for crude oil on tight oil supply over the past week

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Price gains of 3% for crude oil on tight oil supply over the past week

The Energy Information Administration says the latest weekly data on crude stockpiles shows that, in the week ended September 10, crude stockpiles fell by 6.422 million barrels as refiners faced a squeeze in crude supply.

For the week ending September 10, a number of market experts had earlier anticipated that crude oil sales would decline by 3.544 million barrels. Crude draws hit a four-week low due to Ida-related disruptions during the week of September. 3.

Friday’s oil futures were lower, with prices easing back from their highest levels since late July. As a result of the run-up earlier in the week, Friday’s selloff is mainly driven by profit-taking.

With the resultant of Tropical Storm Nicholas and Hurricane Ida’s impacts in the Gulf of Mexico, U.S. crude production remains sidelined in that part of the Gulf more than 30% of the time.

As a result, the outlook for global demand growth is deteriorating as the delta variant spreads. West Texas Intermediate crude for October delivery on the New York Mercantile Exchange fell 0.9%, to settle at nearly $72 a barrel.

Overall, prices climbed 3.2% last week US Gulf of Mexico production is gradually returning to full service – as of today, roughly a quarter of oil output remains halted – but expectations of continued US stock draws have weighed on the market sentiment and pushed Brent prices towards $75 per barrel.

Ida-triggered supply disruptions will only worsen the tight market in the coming weeks, as global demand slows down faster than supply, despite OPEC+ pushing more barrels into the market.

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