By Peter Nurse
Investing.com -- Oil prices traded firmly higher Friday, helped by the lingering impact of Hurricane Ida on the U.S. Gulf of Mexico producers as well as the hope of better U.S.-China trade relations.
London-traded Brent crude, the global benchmark for oil, settled at $72.92 per barrel, up $1.47, or 2.1%. For the week, Brent rose 0.4%.
New York-traded West Texas Intermediate, the benchmark for U.S. oil, settled at $69.72 per barrel, up $1.58, or 2.3%. For the week, WTI rose 0.6%.
The damage caused by Hurricane Ida continues to be felt by the U.S. producers in the Gulf of Mexico well over a week after the devastating storm made landfall. The latest estimate points to around three-quarters of the region's offshore oil production, or about 1.4 million barrels per day, remaining offline since late August.
“Total crude oil production losses as a result of Hurricane Ida now amount to a little over 22MMbbls, and with output still struggling to recover, this will grow,” said analysts at ING, in a note.
Royal Dutch Shell (LON:RDSa), the largest operator offshore in the region, declared force majeure on some of its contracts on Thursday, in a move that suggested it expects its operations to stay affected for some time.
U.S. crude oil inventory draws hit four-week lows last week, data from the Energy Information Administration showed on Thursday, with refinery closures as a result of the hurricane hitting the demand.
Crude stockpiles fell by 1.5 million barrels in the week to Sept. 3, the EIA said in its Weekly Petroleum Status Report, which was the smallest drawdown in U.S. crude stocks since early August.
Adding to the positive tone was the news of a call between U.S. President Joe Biden and his Chinese counterpart Xi Jinping late Thursday, raising hopes for warmer relations between the globe’s two economic superpowers and thus a potential boost to global trade.
These gains contrasted with Thursday’s weakness after China announced it had released crude oil reserves for the first time to try and support its refiners who were struggling with high costs.
The Organization of the Petroleum Exporting Countries and the International Energy Agency both reveal their revisions to the oil demand outlook for 2022 next week, and the market will study them carefully for their views on the impact of the spread of the delta variant of the Covid-19 virus on future demand levels.