Oil tops three-week rally ahead of dip

Monday morning, prices fell slightly again, however, and are now at roughly the same level as Friday.
Photo: JONATHAN ALCORN/REUTERS / X02898
Photo: JONATHAN ALCORN/REUTERS / X02898
BY RITZAU FINANS, TRANSLATED BY DANIEL FRANK CHRISTENSEN

Late Sunday night CET, oil prices reached a three-week high in the wake of hurricane Ida hitting the US Gulf Coast. Monday morning, though, crude was trading at more or less the same level as Friday afternoon.

A barrel of European reference crude Brent trades Monday morning for USD 72.97 against 72.37 Friday efternoon. US counterpart West Texas Intermediate concurrently sells for USD 68.67 compared to USD 68.72.

Last week, prices surged by 10-11 percent due to factors including weather forecasts affecting the Gulf of Mexico, leading numerous companies to temporarily halt operations due to activities in the area.

Hurricane Ida struck land near Port Fourchon close to New Orleans at 18:55 CET, Reuters reports.

In and around Louisiana, PBF Energy and Louisiana Marathon Petroleum temporarily stopped activity at oil refineries handling 768,000 barrels per day on account of the storm.

Altogether, local fossil energy companies halted 95 percent of all crude extraction equating to 1.74 million bpd along the gulf, which supplies around 17 percent of the US' consumption.

"It’s still early days to know the full impact of Hurricane Ida," says Vivek Dhar, commodities analyst at Commonwealth Bank of Australia, to the news agency.

"Oil products, like gasoline and diesel, are likely to see prices rise more acutely from refinery outages, especially if there are difficulties in bringing refineries and pipelines back online," he adds.

Colonial Pipeline, which manages the US' largest fuel pipelines, informed on Sunday that it would temporarily stop deliveries from Houston, Texas, to Greensboro in North Carolina because of hurricane Ida.

At the same time, the tropical storm blocked deliveries to Louisiana Offshore Oil Port (LOOP), according to the port's website.

LOOP is the largest private crude oil terminal in the US, and is the only port able to offload supertankers. The port handles 15 percent of domestic oil as well as 10-15 percent of all import.

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