Oil Fluctuates With U.S. Outages Weighed Against Demand Concern

Futures lost 0.2% in New York, erasing earlier gains. Just over 20% of U.S. Gulf of Mexico oil output is back online after Hurricane Ida hit Louisiana, marking a slower comeback than in the wake of Katrina. Yet crude faces headwinds from wider markets, which drifted lower on Thursday as investors fretted over Covid’s ongoing impact on demand and risks to the global economic recovery.

The market is grappling with mixed demand signals, with consumption rallying in some countries — even surpassing pre-pandemic levels in the U.S. — but remaining precarious in some regions.

“The Brent price seems to have established a center of gravity over the late spring and summer at over $70 a barrel,” said Jon Rigby, an analyst at UBS Group AG. “It remains to be seen whether this remains the case as we head into the northern hemisphere winter, with the higher case rates associated with the delta Covid variant.”

In the U.S., most Gulf of Mexico production remains shut in, more than a week after the Category 4 storm made landfall. Physical markets have reacted to the outages with a surge in the value of grades from U.S. Mars Blend to Russia’s Urals.

The American Petroleum Institute reported a 2.88 million-barrel weekly decline in U.S. crude stockpiles, according to people familiar with the data. A Bloomberg survey showed a 4.75 million-barrel drop, ahead of official government figures due later on Thursday.