Oil prices reached briefly a high record this Friday after consistent losses weeks ago. Oil reached $73 per barrel, supported by signs of tight supply in the global market, mainly due to Hurricane Ida’s havoc on the United States.
According to Reuters, around three-quarters of U.S. Gulf Coast production has remained halted since late August, after Ida landed in Louisiana. As we reported previously, losses and damages on offshore platforms are substantial, and many refineries remain shut due to power outages and other inconveniences.
Around 1,4 million barrels per day of oil remain halted as of this Friday, roughly what OPEC member Nigeria produces. This situation has created a tightness in oil supply worldwide, which helped oil prices.
Phil Flynn, senior analyst at Price Futures Group in Chicago, said. “The market is back to focusing on the tighter supply situation globally, and that is giving it a boost.”
On the other hand, China has been releasing oil from its strategic petroleum reserve; however, such output is more than offset by the reduced production from the United States. Consequently, Brent crude rose $1,47 or 2,3% to $72,92 per barrel. In contrast, the U.S. mix, the West Texas Intermediate rose $1,58, and settled to $69,72. The session high was $73 per barrel for Brent.
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Biden-Xi phone call pushes oil further
Both contracts posted slight gains as of this week. In fact, Brent has recovered 41% this year, mostly due to the supply cuts from the Organization of Petroleum Exporting Counties.
On the other hand, news broke today of a phone call between president Joe Biden and his Chinese counterpart Xi Jinping. The call was seen as a sign of warmer relations between the two countries, which gave oil prices a further boost.
Jeffrey Halley, an analyst at brokerage OANDA, said, quoted by Reuters. “The Biden-Xi phone call has had the same effect on oil markets as it has on other asset classes.”
Finally, Baker Hughes reported that the U.S. added more oil rigs to its rig count, which is a sign of recovery after Ida.
