Crude oil futures settled higher on Wednesday as prices rose on reports about a slow progress in restoration of crude output in the Gulf of Mexico region.
Worries about the outlook for energy demand due to the surge in coronavirus cases, and a strong dollar limited oil’s gains.
West Texas Intermediate Crude oil futures for October ended up by $0.95 or about 1.4% at $69.30 a barrel.
Brent crude futures were up $0.91 or 1.28% at $72.60 a barrel a little while ago.
The Energy Information Administration said in its monthly Short-Term Energy Outlook report that it has lowered global oil demand expectations to account for “reactions to the proliferation of the delta variant.” The EIA expects global demand to grow by 5 million barrels per day this year, as against last month’s forecast for a growth of 5.3 million barrels per day.
EIA expects U.S. crude oil output to be 11.08 million barrels per day, down 0.3% from the previous forecast.
According to reports, oil producers in the Gulf of Mexico region are struggling to restart operations even nearly 10 days after Hurricane Ida swept through the area with powerful winds.
More than 80% of oil production in the Gulf of Mexico remains shut due to structural damage caused by Hurricane Ida, leading to ongoing power outages.
The resulting disruption has seen the value of regional oil grades like Mars Blend jump to their highest level since January, according to data compiled by Bloomberg.
Traders now look ahead to weekly inventory reports from the American Petroleum Institute (API) and Energy Information Administration. While the API is scheduled to release its data later today, the EIA’s report is due Thursday morning.
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