Oil prices rose to their highest level in six weeks early on Tuesday as the IEA said it expects a strong rebound in global oil demand from October and as another storm threatened to cause disruptions to the oil industry in the U.S. Gulf area.
Oil is now at its highest level since the end of July, before prices started sliding in August on concerns about oil demand with the surge of the Delta COVID variant.
Early on Tuesday, oil was supported by the outlook for the next few months in the International Energy Agency’s Oil Market Report, which showed earlier in the day that the IEA expects global oil demand to rebound with a 1.6-million-bpd jump in October and continue rising through the end of the year, after three consecutive months of declines due to the Delta variant.
“Strong pent-up demand and continued progress in vaccination programmes should underpin a robust rebound from 4Q21,” said the IEA, which raised by 85,000 bpd its estimates for next year’s demand growth.
Along with improved demand outlook from the IEA – and a massive 900,000-bpd bump in OPEC’s 2022 demand forecast a day before—oil prices were also supported by the new storm, Nicholas, which made landfall in Texas in the early hours on Tuesday.
Power outages near the point of the landfall in southeast Texas were reported on Tuesday, including in the county of Galveston. Analysts will be monitoring whether the rainfall and storm surges would disrupt refinery operations along the U.S. Gulf Coast in Texas and Louisiana in the coming days.
Crude oil prices are up “for a third day as extreme weather in the US continues to curtail supply while demand continues to recover. Having only managed to restart 56% of Gulf of Mexico production after Hurricane Ida more than two weeks ago, the oil market anxiously waits to see the impact of Nicholas which has strengthened into a hurricane before reaching the Texas coast,” Saxo Bank said early on Tuesday.
By Tsvetana Paraskova for Oilprice.com
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