Oil posts largest weekly gain since June ‘20 as Ida cuts Gulf of Mexico output by 96%

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Oil posts largest weekly gain since June ‘20 as Ida cuts Gulf of Mexico output by 96%

Both US and UK crude futures’ prices jumped as much as 2 per cent on Friday with both benchmarks reporting their largest weekly gains in more than a year, as energy firms had started off shutting down operations in the US Gulf of Mexico ahead of a Category 4 ‘Hurricane’ Ida which is expected to hit as early as by Monday morning.

As of Friday’s US late-afternoon trading hour, oil firms had slashed US Gulf of Mexico output by 59 per cent, raising possibilities of a havoc-scale supply deficit given the scale of expected damage, while a further decline in US Dollar following dovish remarks from the Fed Chair Powell had offset the impacts of an increase in US oil drilling rig counts for a 12th straight month in a row.

In point of fact, Friday’s steep gain in crude oil futures’ prices were almost entirely galvanized by a weaker dollar alongside a rush to empty up oil stations in the US Gulf of Mexico ahead of Hurricane Ida.

Apart from the likely impacts of Hurricane Ida on Gulf of Mexico oil rigs, dovish remarks from US Fed Chair Powell had drowned the US Dollar while raising appeal for US Treasury bond notes, as speaking in an annual Jackson Hole meet of Central Bankers, Powell had declined to provide any whereabouts on when the US Fed would begin to taper fiscal support for the economy.

Crude oil posts largest weekly gain since June 2020

Citing statistics, on Friday’s commodity market wind-down, UK crude oil futures’ prices soared 2.3 per cent to settle down at $72.70 per barrel, while US West Texas Intermediate (WTI) crude oil futures’ prices gained 2.0 per cent to $68.74.

Brent crude contracts had marked up their highest closing level since August 2, while US WTI crude oil futures had reported their strongest wind-ups since August 12. On the week, UK crude gained more than 11.0 per cent and US crude oil futures’ prices had skyrocketed as much as 10.0 per cent, remarking the largest weekly percentage gains for both benchmarks since June 2020.

Addressing to growing possibilities of a delayed return of normalcy in the US Gulf of Mexico, a senior market analyst at OANDA, Edward Moya said, “Energy traders are pushing crude prices higher in anticipation of disruptions in output in the Gulf of Mexico and on growing expectations OPEC+ might resist raising output given the recent Delta variant impact over crude demand”.