Oil gained amid a slow return of U.S. production after Hurricane Ida hit south-east Louisiana. Futures in New York rose as much as 2.1% on Wednesday to top $69 a barrel. More than a week after the Category 4 storm made landfall, about 79% of Gulf of Mexico offshore oil output and 78% of gas production remains shut-in, according to the Bureau of Safety and Environmental Enforcement.
The resulting disruption has seen the value of regional grades such as Mars Blend reach the highest since January. Most in the industry were expecting Gulf of Mexico production to return faster than refining, but now “it seems that it may be the other way around,” said Rebecca Babin, senior energy trader at CIBC Private Wealth Management.
Benchmark U.S. oil futures have held close to $69 a barrel so far this month in the wake of pockets of robust consumption emerging in some regions including Europe, though the fast-spreading delta variant of the coronavirus has resulted in renewed lockdowns in other areas. China, the world’s largest oil importer, has managed to contain its latest outbreak and there are expectations that the market will tighten in coming months.
Meanwhile, a fresh wave of protests at key Libyan oilfields and ports threatens to derail stability in the OPEC member’s production and exports. After Ida, prolonged oil-production outages in the Gulf of Mexico could end up benefiting an industry that was worrying about delta’s spread affecting demand.
