By Peter Nurse
Investing.com — Oil prices edged lower Friday, but are heading for a fourth consecutive weekly gain as supply in the important U.S. Gulf of Mexico region is only slowly returning to normal after Hurricane Ida.
By 9:25 AM ET (1325), futures were down 1.1% at $71.75 a barrel, while futures were down 0.8% at $75.07 a barrel, pulling back from seven-week highs.
Both benchmarks are heading for weekly gains of well over 3%, the fourth consecutive positive week, the best run since early July.
U.S. Gasoline RBOB Futures were down 0.8% at $2.1645 a gallon.
Oil has surged of late as global consumption continues to recover from the pandemic, while a couple of hurricanes, Ida in particular, have affected production in the crucial U.S. Gulf of Mexico region, offsetting the production of additional barrels from the Organization of the Petroleum Exporting Countries and its allies.
As of Thursday, about 28% of Gulf crude production – over 510,000 barrels a day – still remained offline, more than two weeks after Hurricane Ida hit.
The effect of this extreme weather was illustrated by Wednesday’s data, which showed U.S. crude inventories dropped by more than 6 million barrels last week to a two-year low.
“This situation shows that we have a very tight supply versus demand situation because the supplies are not coming back online fast enough. We’re probably going to see a continued price squeeze,” said Phil Flynn, an analyst at Price Group, in a note.
Turning away from supply, both the International Energy Agency and OPEC this week raised their forecasts for oil demand in 2022, seeing increasing vaccination around the globe decreasing the impact of the Covid-19 virus.
The CFTC’s speculative data and Baker Hughes’ round off the week later.
Fusion Media or anyone involved with Fusion Media will not accept any liability for loss or damage as a result of reliance on the information including data, quotes, charts and buy/sell signals contained within this website. Please be fully informed regarding the risks and costs associated with trading the financial markets, it is one of the riskiest investment forms possible.