OIL RISES ON LOWER OUTPUT

OIL PRICES rose to near six-week highs yesterday as US output remains slow to return two weeks after Hurricane Ida slammed into the Gulf Coast and worries another storm could affect output in Texas this week.

Those gains came even though the Organisation of the Petroleum Exporting Countries (Opec) trimmed its world oil demand forecast for the last quarter of 2021 due to the Delta coronavirus variant.

Opec said a further recovery would be delayed until next year when consumption will exceed pre-pandemic rates.

Brent futures climbed 53 cents, or 0.7 percent, to $73.45 (about R1 042) a barrel by 5.30pm, while US West Texas Intermediate (WTI) crude rose 71c, or 1 percent, to $70.43 a barrel.

That puts Brent on track for its highest close since August 3 and WTI on track for its highest close since July 30.

“Hurricane Ida’s impact is lasting more than the market expected and as some oil production capacity remains shut this week, prices are rising on supply not being restored and therefore not reaching refineries that have restarted operations quicker than producers,” Nishant Bhushan, oil markets analyst at Rystad Energy.

Further disruption from bad weather could be around the corner, with the US National Hurricane Centre projecting Tropical Storm Nicholas would remain a storm.

In addition to the Opec forecast, other bearish factors also held back oil price gains yesterday, including persistent worries about coronavirus on global crude demand, potential supply increases from planned releases of oil from strategic reserves in the US and China, and the possibility Iran could be moving closer to selling oil to the world again.

A city in China’s southeastern province has closed cinemas and gyms, sealed off some entries as it battles a local Covid-19 outbreak.