FILE PHOTO: Crude oil storage tanks are seen from above at the Cushing oil hub, in Cushing, Oklahoma, U.S., March 24, 2016. REUTERS/Nick Oxford
September 1, 2021
By Sonali Paul
MELBOURNE (Reuters) – Oil prices were stable on Wednesday ahead of an OPEC+ meeting, at which major producers will decide whether to go ahead with their plan to add supply while COVID-19 cases soar in Asia and U.S. refiners assess flood damage in the wake of Hurricane Ida.
The Organization of the Petroleum Exporting Countries (OPEC), Russia and allies, together called OPEC+, are due to meet on Wednesday at 1500 GMT to decide whether to stick to a plan to add 400,000 barrels per day (bpd) each month through December.
OPEC+ expects the market to be in deficit at last until the end of 2021, OPEC+ sources said.
“This should provide comfort to the group that they can proceed with their planned monthly 400,000 bpd increase in production,” ANZ Research analysts said in a note.
OPEC+ sources told Reuters the meeting is likely to roll over existing policies despite pressure from the United States to boost supply further.
U.S. West Texas Intermediate (WTI) crude futures inched up 7 cents, or 0.1%, to $68.57 a barrel at 0125 GMT, after falling 1% on Tuesday on expectations oil demand would drop as six refineries in Louisiana were shut after Hurricane Ida hit.
Brent crude futures were up 5 cents at $71.70 a barrel, after losing 42 cents on Tuesday.
A total of 2.3 million bpd of refining capacity, or 13% of U.S. capacity, was shut in Louisiana due to Hurricane Ida, the U.S. Department of Energy estimated. At the same time, about 94% of oil and natural gas production remained suspended in the U.S. side of the Gulf of Mexico.
Power outages are likely to slow reopening of the processing plants, but Exxon Mobil’s 520,000 bpd Baton Rouge complex was preparing to restart on Tuesday.
“We see a risk that the loss of U.S. refinery demand will be greater and more prolonged than the loss of crude supply,” Bjornar Tonhaugen, head of oil markets at Rystad Energy, said in a note, adding that it could weigh on WTI prices through September.
Supporting the market, American Petroleum Institute industry data showed U.S. crude stocks fell by 4 million barrels for the week ended Aug. 27, which was a bigger decline than analysts had expected in a Reuters poll. [API/S]
Official U.S. Energy Information Administration inventory data is due on Wednesday.
(Reporting by Sonali Paul. Editing by Gerry Doyle)