Oil prices traded higher Monday morning to maintain a three-week bullish momentum.
Brent, the internationally traded crude oil benchmark, is holding steady at $73.40/bbl and has climbed above $73/bbl for the first time after a string of three weekly gains as investors see the slow recovery in stocks in the Gulf of Mexico and Fourth Quarter Demand and Inventory Outlook.
According to the Bureau of Safety and Environmental Enforcement’s latest count, more than two weeks since Hurricane Ida hit the main production region, nearly half of crude oil production in the US Gulf of Mexico has to be restarted. And another tropical storm is sweeping the US.
In the US, the aftermath of Hurricane Ida has caused about 1.1 million barrels of daily crude production in the Gulf of Mexico to shut down, and it’s unclear when that output will return.
This is part of a bullish sign for oil prices, according to the world’s largest independent trader.
Ida, which made landfall as a hurricane near New Orleans last month, hit the US from the Gulf Coast to the Atlantic Coast. With oil production on a precautionary shutdown and OPEC+ cuts curtailing production, buyers have less oil to meet recovering demand as economies pull out of the coronavirus-induced downturn.
According to Baker Hughes, the number of oil rigs in the US has increased by 6 in the past week to 503.
Nearly two weeks since the storm made landfall in Louisiana, inventory volume still remains offline well above 1 million barrels per day, or two-thirds of usual production.