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Oil steady as U.S. storm-hit supply returns slowly By Reuters


© Reuters. FILE PHOTO: A TORC Oil & Gas pump jack is seen near Granum, Alberta, Canada May 6, 2020. REUTERS/Todd Korol/File Photo

By Sonali Paul

MELBOURNE (Reuters) – Oil prices barely moved on Friday even as more supply came back online in the U.S. Gulf of Mexico following two hurricanes, with benchmark contracts on track to post weekly gains of around 4% as the output recovery is seen lagging demand.

U.S. West Texas Intermediate oil (WTI), futures dropped 2 cents to $72.59 per barrel at 0147 GMT. They had remained unchanged on Thursday.

Futures gained 21 cents on Thursday, as they rose 4 cents to $75.71 per barrel.

Brent was on track to rise 4% this week and WTI close to a six week high. This is due in part because U.S. Gulf of Mexico output has been recovering slower than anticipated after hurricane Ida in August. Tropical storm Nicholas also hit this week.

As of Thursday, about 28% of U.S. Gulf of Mexico crude production remained offline, two-and-a-half weeks after Hurricane Ida hit.

In terms of the return, it’s still slower than many people expected. Vivek Dahar, Commonwealth Bank commodities analyst said this was a supporting factor.

We’re likely to enter more supply deficit conditions, that seems certain.

Preliminary data from the U.S. Energy Information Administration showed exports in September have slipped to between 2.34 million bpd and 2.62 million bpd from 3 million bpd in late August.

Dhar also mentioned data released by the International Energy Agency last week that showed OECD oil inventories dropping to a low level in November. This is due to the expected recovery in fuel demand.

He said that the risk of weakening demand in Southeast Asia is now lessened as COVID-19 case levels appear to have peaked for countries such as Indonesia, Malaysia, and Thailand.

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