© Reuters. FILE PHOTO: A TORC Oil & Gas pump cylinder is seen near Granum, Alberta, Canada, May 6, 2020. REUTERS / Todd Korol / File Photo
By Roslan Khasawneh
SINGAPORE (Reuters) – Oil prices fell on Friday as supply came back online in the Gulf of Mexico in the United States following two hurricanes, but the two benchmark contracts are on track to post weekly gains of around 4% as the upturn in production lags demand.
Futures fell 17 cents, or 0.2%, to $ 75.50 a barrel by 03:59 GMT, abandoning most of the 21-cent gain from the previous session.
US West Texas Intermediate (WTI) crude futures were down 18 cents, or 0.3%, to $ 72.43 a barrel, after leveling off on Thursday.
“Oil prices are slightly lower as US offshore production continues to slowly return and the return to normal in large parts of Asia has encountered obstacles and some countries still struggle to contain the spread of the delta variant, ”said Edward Moya, senior market analyst at OANDA.
Both contracts were on track to climb nearly 4% for the week, as production in the U.S. Gulf of Mexico recovered more slowly than expected after Hurricane Ida damaged facilities in August and that Tropical Storm Nicholas hit this week.
“Crude prices are enjoying another good week despite the general weakness in commodities that stems from a resilient US dollar,” Moya said.
The dollar hit a three-week high on Friday, making dollar-traded crude imports more expensive for countries using other currencies.
As of Thursday, around 28% of U.S. Gulf of Mexico crude production went offline https://www.reuters.com/business/energy/us-gulf-crude-oil-ramps-up-after-hurricane-losses -data- 2021-09-16, two and a half weeks after the passage of Hurricane Ida.
“It is taking even longer than people thought in terms of return. It has been a supporting factor in the market,” said Vivek Dhar, commodities analyst at Commonwealth Bank.
“We’re going to get into more deficit (supply) conditions – that certainly seems to be the point of view.”
Preliminary data from the US Energy Information Administration showed exports in September fell to between 2.34 million bpd and 2.62 million bpd, from 3 million bpd at the end of August.
Dhar also pointed to data from the International Energy Agency this week showing that OECD oil stocks fell to a low in November as the recovery in fuel demand is expected to outstrip supply.
The risk of weakening demand in Southeast Asia has eased as COVID-19 cases appear to have peaked in countries like Indonesia, Malaysia and Thailand, he said. .
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