- Crude oil futures were higher in mid-morning trade in Asia Sept. 1 amid the tightening of US inventories and bullish demand conditions in China.
- Brent futures contract was up 57 cents/b (0.79%) from the previous close at $72.20/b, while the NYMEX October light sweet crude contract was 52 cents/b (0.75%) higher at $69.02/b.
A Platts news source by Jasper Chan states that crude extends gain on tight US inventories, bullish demand sentiment.
Oil production outage to resume
“The market is starting to digest the fact that the oil production outage is probably going to take some time in resuming, which will cause a tightening of crude inventory along with the rising demand, resulting in bullishness in the market,” said Vandana Hari, CEO of Vanda Insights on Sept. 1, adding that China’s appetite for crude oil seems to be recovering after successfully curbing the resurgence of delta variant.
Edward Moya, senior market analyst from OANDA noted there was optimism for crude demand across Europe as 70% of the adults in the EU are fully vaccinated.
In the offshore Gulf of Mexico, or GOM, roughly 1.7 million b/d of crude production remained offline Aug. 31, which is 94% of the total GOM output, the US Bureau of Safety and Environmental Enforcement noted. That was down slightly from 1.72 million b/d a day prior.
What does S&P Global Platts Analytics?
According to estimates from S&P Global Platts Analytics, about 2.2 million b/d of Louisiana refining capacity remained offline Aug. 31 following the passing and downgrading of Hurricane Ida, as most plants are without power from outside supplier Entergy.
Meanwhile, the OPEC+ alliance is scheduled to meet Sept. 1 to decide whether to press on with plans to hike crude production by 400,000 b/d every month, as it is looking to eventually remove its output cuts implemented at the start of the pandemic.
“It is likely that OPEC+ will take a cautious approach by having its original production level unchanged. There is very little reason to increase production, even though the US Administration has urged OPEC to increase the output further. This seems to be unlikely due to these uncertain times caused by the outbreak of the delta variant in many countries,” a market source said.
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