Oil prices climbed Friday, on track to post big gains for the week, on worries about near term supply disruptions as energy companies began shutting in production in the Gulf Of Mexico ahead of a potential hurricane forecast to hit on the weekend.
U.S. West Texas Intermediate (WTI) crude futures climbed 16 cents, or 0.2 per cent, to $67.58 a barrel regaining a 1.4 per cent loss on Thursday. WTI is headed for a weekly gain of more than 8 per cent which would be its strongest rise since early February.
Brent crude futures similarly rose 16 cents, or 0.2 per cent to $71.23 a barrel, after falling 1.6 per cent on Thursday.
Brent is on track for a rise of more than 9 per cent this week, it’s biggest weekly jump since June 2020 mostly on relief that China has contained an outbreak of the Delta Variant.
Gulf of Mexico offshore wells account for 17 per cent of U.S. crude oil production and 5 per cent of dry natural gas production. Over 45 per cent of total U.S. refining capacity lies along the Gulf Coast.
The prospect of U.S. Gulf supply outages helped turn the market around from losses on Thursday, which had been partly spurred by output returning at a Mexican oil platform following a fatal fire.
“The market may have more immediate concerns, with a storm building in the Caribbean. It’s expected to become a powerful hurricane and potentially wreak havoc in the Gulf of Mexico and Texas early next week,” ANZ Research said in a note.
Analysts also expect moves in the dollar to be a big factor on Friday, after U.S. Federal Reserve Chairman Jerome Powell gives a highly anticipated speech. The markets expect he may give some guidance on plans for tapering of bond purchases in the fourth quarter.