Brent Crude Bulls Rage As Hurricane Ida Wrecks Havoc
As a powerful hurricane roiling the Gulf of Mexico forced hundreds of offshore oil platforms to shut down and evacuate, oil prices on Monday pared gains off of more than three-week highs reached earlier in the day.
Brent crude futures was trading at $72 per barrel at the time of this report. Due to the possibility of oil production disruptions from Ida, it rose over 11% last week.
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Prior to Ida’s arrival near Port Fourchon, Louisiana, a hub of the Gulf’s offshore energy industry, the benchmarks hit highs not seen since early August, at $73.69 and $69.64, respectively.
Recall prices have eased lower over the past month dropping below the key psychological level of $70 a few times before finding support at $67.50. Currently, the price is just back above $71.50 a barrel with another test of this key level of $75.5 a barrel still in play (30th July High).
Although the price of oil may remain volatile, commentators anticipate that the upward trend will continue. It asserted that the global trend towards economic normalization is “intact” and that oil demand is expected to increase.
Oil demand rose by nearly three times the seasonal norm in June, according to estimates by the International Energy Agency (IEA).
North America and Europe have experienced increased mobility, leading to an increase in demand. After the restrictions were lifted in May, the oil demand in India also recovered quickly.
We remain confident that the restrictions on infections in China – affecting only a few areas rather than entire cities – will soon be lifted and will not impact the economy too much. In September, market analysts further anticipate Chinese oil demand to start recovering.