The black liquid has posted its fourth straight weekly gain. This can be attributed to the impact of unexpected supply shortages from the three-week-old Hurricane Ida, despite a risk-off sentiment across markets on Friday that weighed partially on crude prices.
The U.S benchmark, New York-traded West Texas Intermediate (WTI), settled on Friday at $71.97 per barrel. However, the benchmark closed the week bullish by 3% regardless of Friday’s decline.
The global benchmark for oil, London-traded Brent crude oil futures finished Friday’s official trade at $75.34, down 0.4% for the day. However, for the week, the Brent futures gained about 3% for the week.
Hurricane Ida forced the closure of 90% of the oil-producing facilities in the U.S. Gulf of Mexico. This is because the hurricane caused a landfall towards the end of August. As of Thursday, weeks after the storm’s landfall, according to the Bureau of Safety and Environmental Enforcement, the government agency monitoring the situation, 513,878 barrels equivalent of oil, or 28.24% of the production in the U.S. Gulf Coast of Mexico remained shut-in.
Also weighing on markets was President Biden’s plan to raise corporate taxes by 5.5 percentage points to 26.5% and next week’s Federal Reserve meeting that could revisit the subject of taper for the central bank’s stimulus program that has increased stock prices over the past 18 months.
John Kilduff, a founding Partner of Again Capital stated, “It’s a risk-off day that scalped a few heads, including oils. But crude is still cruising on the supply tightness caused by Ida. There’s some talk today that the situation is easing. But it’s nowhere near enough to cause a meaningful correction in oil that will happen — at some point.”
Data from the Energy Information Administration revealed that U.S. crude stockpiles dropped by 6.422 million barrels in the latest week to September 10 on heavier-than-expected drawdown from inventories by refiners facing a squeeze in domestic crude supply. Analysts polled by Investing.com had forecast a drop of 3.544 million barrels for the week to September 10. In the previous week to September 3, crude draws hit four-week lows from Ida-related disruptions.