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Crude Oil Prices Halt Overnight Losses Due To Supply Squeeze

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With U.S. producers, oil prices rose at their midweek trading sessions, reducing overnight losses. Hurricane Ida hit the Gulf of Mexico nine days ago, leaving operations crippled.

After losing 1.4% on Tuesday following the Labor Day holiday, U.S. West Texas Intermediate crude futures are up 0.2% at $68 per barrel.

Following a 0.7% decline on Tuesday, Brent crude futures rose 0.2%, to $71.83 a barrel. An ongoing delay in resuming operations in the Gulf of Mexico is weighing on the market

More than a week after Hurricane Ida made landfall, more than 79% of US Gulf production is still offline.

There are 79 unoccupied platforms. So far, the market has lost 17.5 million barrels of oil. About 17% of U.S. oil production comes from offshore wells in the Gulf of Mexico.

Since the pandemic’s depths, oil’s sizzling rally has been interrupted as delta spreads, curtailing fuel consumption. It is expected that the market will tighten through the end of the year after China, the world’s largest oil importer has contained its outbreak of variants.

Brent was trading 64 cents for the prompt time spread in backwardation — a bullish structure in which near-dated contracts were more expensive than later-dated contracts. On Monday, the price was 60 cents.

In Singapore, Covid-19 infections hit a one-year high, and the city-state is considering imposing more restrictions, though the Philippines is backtracking on easing curbs there.

Although more than six million Americans have been vaccinated, the death toll in the country is over 650,000.

On Wednesday, the American Petroleum Institute will release its inventory data, and the Energy Information Administration data analysis of crude production and refinery output will be released on Thursday

This article was originally posted on FX Empire

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