Oil prices eased on Friday as U.S. Gulf of Mexico crude production resumed following Hurricane Francine and data revealed an increase in the U.S. rig count.
Brent crude futures settled at $71.61 per barrel, down 36 cents or 0.5%, while U.S. West Texas Intermediate (WTI) crude finished at $68.65 per barrel, down 32 cents or 0.5%.
The resumption of production and refining activities in the U.S. Gulf Coast led investors to offload oil contracts ahead of the weekend, according to Bob Yawger, Director of Energy Futures at Mizuho in New York. You could come back Monday and everything is fine—the refineries are running at full capacity, production has normalized, and gasoline is flowing from the refineries. The market could potentially see a significant pullback,” Yawger noted.
Despite the decline on Friday, oil futures ended the week on a positive note, recovering from earlier storm-induced gains. Brent crude prices increased by about 0.8% since last Friday’s close, while WTI saw a gain of roughly 1.4%.
Data indicated that the storm had temporarily halted nearly 42% of oil production in the region, which accounts for about 15% of U.S. output. These disruptions are expected to be short-lived and, within the broader context, are unlikely to significantly alter crude oil balances given the substantial role of shale production in U.S. output,” said Ritterbusch.
Additionally, the rise in oil prices was pressured by an increase in the U.S. rig count, reported by Baker Hughes. The oil and gas rig count rose by eight to 590 for the week ending September 13, marking the largest weekly increase in a year. Oil rigs increased by five to 488, while gas rigs rose by three to 97.
Money managers also reduced their net long crude futures and options positions in New York and London by 27,493 contracts, bringing the total to 59,741 for the week ending September 10, according to the U.S. Commodity Futures Trading Commission.
Both the Organization of the Petroleum Exporting Countries (OPEC) and the International Energy Agency (IEA) have downgraded their demand growth forecasts, citing economic challenges in China, the world’s largest oil importer. Additionally, U.S. oil stockpiles increased last week as crude imports grew and exports decreased, while fuel demand showed signs of weakness, according to the Energy Information Administration.
Investors are now turning their attention to the U.S. Federal Reserve’s upcoming two-day policy meeting next week, with widespread expectations for an interest rate cut on Wednesday.
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