Brent crude neared $74 per barrel on Monday as it gained 31 cents or 0.42 cents to trade at $73.82 per barrel at the market, while the US West Texas Intermediate (WTI) crude rose by 34 cents or 0.47 per cent to sell at $70.78 per barrel.
The rise in the prices of the two crude futures was buoyed by the slow return in the oil output in the United States two weeks after Hurricane Ida slammed into the Gulf Coast with fresh worries that another storm could affect output this week.
Almost half of the crude output in the key producing region has yet to resume since Hurricane Ida slammed into the Gulf of Mexico, according to the country’s Bureau of Safety and Environmental Enforcement (BSEE).
The aftermath of the hurricane has left about 1.1 million barrels of daily production shuttered and it is currently unclear when that output will return, a bullish sign for oil.
Further disruption from bad weather could be around the corner, with the US National Hurricane Center projecting Tropical Storm Nicholas will scrape along the South Texas coast.
Prices were also supported by a shocking bullish forecast by the Organisation of the Petroleum Exporting Countries (OPEC), which raised its 2022 demand forecast by an unexpected 900,000 barrels per day.
Next year, oil demand worldwide is now expected to jump by around 4.2 million barrels per day compared to 2021, an upward revision of 900,000 barrels per day. compared to last month’s assessment, OPEC said in its closely-watched Monthly Oil Market Report (MOMR).
The surge of the Delta variant around the globe is set to partially delay oil demand recovery into the next year when robust economic growth and stronger recovery in fuel consumption will see global oil demand averaging 100.8 million barrels per day and exceeding pre-COVID levels.
The Vienna-based cartel noted that this year, total global oil demand remains unchanged at 96.7 million barrels per day for the whole of 2021.
However, the fourth-quarter demand was revised slightly down, by 110,000 barrels per day from the August estimate of 99.82 million barrels per day to 99.7 million barrels per day now, OPEC said in its September report.
The market is also facing some bearish consequences as potential supply increases from planned releases of oil from strategic reserves in the United States and China threatens the market, worsened by the possibility that Iran could be closer to selling oil to the world again.