LONDON (Reuters) – Oil steadied on Monday, abandoning most of an earlier rally to a four-week high, as Hurricane Ida weakened after forcing shutdowns of U.S. Gulf boring , and OPEC+ looked set to travel ahead with a planned oil output increase.
Within 12 hours of coming ashore, the storm had weakened into a Category 1 hurricane. Nearly all offshore Gulf boring , or 1.74 million barrels per day, was suspended beforehand of the storm Brent crude was up 11 cents, or 0.2%, at $72.81 by 1135 GMT, having reached $73.69 earlier, the very best since Aug. 2. U.S. crude fell 30 cents or 0.4% to $68.44, having earlier touched $69.64, the very best since Aug. 6.
“Hurricane Ida will dictate oil’s near-term direction,” said Jeffrey Halley, senior analyst at OANDA. “If Ida weakens and its path of destruction is less than expected, oil’s rally will temporarily lose momentum here While crude fell on anticipation of a fast supply recovery, U.S. gasoline was up almost 2% as power outages added to refinery closures on the Gulf Coast and traders weighed the likelihood of prolonged disruptions.
“It’s still youth ,” said Vivek Dhar, analyst at Commonwealth Bank of Australia (OTC:CMWAY). “Oil products, like gasoline and diesel, are likely to ascertain prices rise more acutely from refinery outages especially if there are difficulties in bringing refineries and pipelines back online.”
Brent has rallied 40% this year, supported by supply cuts by the Organization of the Petroleum Exporting Countries and allies, referred to as OPEC+, and a few demand recovery from last year’s pandemic-induced collapse.
OPEC+ meets on Wednesday to debate a scheduled 400,000 bpd increase in its oil output, in what would be an extra easing of the record output cuts made last year OPEC delegates say they expect the rise to travel ahead, although Kuwait’s oil minister said on Sunday it might be reconsidered.