On Monday, oil prices went up following the double storms on Sunday engulfing the Gulf of Mexico and shut more than half the area’s oil production. However, gains were capped by the weak outlook on demand.
By 00.40 GMT, Brent crude oil futures rose by 0.2% or 8 cents to USD44.43/barrel while US WTI inched up by 0.2% or 7 cents to USD42.41/barrel.
In comparison, on Friday both benchmark contracts slumped by around 1% due to increasing crude stockpiles and economic concerns.
On Sunday, both Hurricane Marco and Tropical Storm Laura struck the Caribbean and Gulf of Mexico, prompting workers’ evacuation from offshore platforms and in turn, stopped oil production. The Gulf oil producers shut 58% of offshore oil production and 45% of natural gas production yesterday.
The region makes up 17% of total US oil production and 5% of US natural gas output.
Another factor supporting prices was the planned compensation from the lacking countries in the OPEC+ group. The Organization of the Petroleum Exporting Countries and its oil power allies said that the lacking countries in the oil production cut pact would need to cut output by more than 1 million bpd for two months to compensate.
Even when oil production in the Gulf was disrupted significantly, some analysts opined that oil gains were still likely to be muted on the back of the coronavirus pandemic impact on the demand outlook. By Saturday, the global death toll from the coronavirus surpassed 800,000, led by the US, Brazil, and India.
