Oil prices recorded higher gain on Monday as storms disrupted activities in the Gulf of Mexico, shutting more than half the region’s oil production although gains were capped by ongoing concerns about demand from COVID-19 lockdowns.
Hurricane Marco and Tropical Storm Laura tore through the Caribbean and Gulf of Mexico on Sunday, forcing energy companies to pull workers from offshore platforms and shut down oil production.
Oil producers had shut 58 per cent of the Gulf’s offshore oil production and 45 per cent of natural gas production on Sunday. The region accounts for 17 per cent of total U.S. oil production and 5 per cent of U.S. natural gas output.
Brent crude oil futures added 8 cents, or 0.2 per cent, to $44.43 a barrel while U.S. West Texas Intermediate crude was up 7 cents, or 0.2 per cent to $42.41 a barrel.
Both benchmark contracts fell about 1 per cent on Friday on economic concerns and rising crude supply.
“Crude prices rose higher as double trouble in the Atlantic could lead to huge disruptions with oil operations in the Gulf of Mexico,” said Edward Moya, senior market analyst at OANDA in New York.
“Oil’s gains, however, are likely to be muted as virus uncertainty continues to weigh on the crude demand outlook.”
The global death toll from the coronavirus surpassed 800,000 on Saturday, according to a Reuters tally, with the United States, Brazil and India leading the rise in fatalities.
Also supporting prices was a report by members of the Organization of the Petroleum Exporting Countries, OPEC, and other oil powers including Russia, that oil producing countries in the OPEC+ group that pumped above supply targets from May to July will need to slash output by over a million barrels per day for two months to compensate.