Published: Sat, October 13, 2018
Money | By Ralph Mccoy

U.S. oil firms restore operations in storm-tossed Gulf of Mexico

U.S. oil firms restore operations in storm-tossed Gulf of Mexico

Oil prices slipped on Wednesday after the International Monetary Fund lowered its global growth forecasts, but markets were supported as Hurricane Michael moved toward Florida causing the shutdown of almost 40 per cent of U.S. Gulf of Mexico crude production.

The ICE Brent crude futures were increased by 94 cents per barrel or 1.19% from $79.74 per barrel, while the NYMEX (New York Mercantile Exchange) October light-sweet crude contract was 76 Cents per barrel or 1.07% higher at $71.54 per barrel.

Oil prices dropped 2% on Wednesday as US equity markets broadly fell, even though energy traders anxious about shrinking Iranian supply from US sanctions and kept an eye on Hurricane Michael, which closed some US Gulf of Mexico oil output.

That's down from at least 2.5 million bpd in April, before President Donald Trump in May withdrew the United States from a 2015 nuclear deal with Iran and reimposed sanctions.

Recently, the US levied new economic sanctions against Iran, causing a drop in oil output there.

US crude stockpiles rose more than expected last week, while gasoline inventories increased and distillate stocks drew, industry group the American Petroleum Institute said on Wednesday.

India, a major buyer, has ordered Iranian oil for November, although New Delhi does not yet know whether it will receive such a waiver.

The Islamic Republic exported 1.1 million barrels per day (bpd) of crude in that seven-day period, Refinitiv Eikon data showed. Production hikes by Saudi Arabia and Libya offset a sharp output decline in Iran, according to independent figures from several sources.

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Shipments into the country last month totalled 37.12 million tonnes, or 9.05 million barrels per day (bpd), up from 9.04 million bpd in August and their third straight monthly rise.

"The bearish alarm bells are ringing for next year's oil balance as market players brace for the return of a supply surplus", said Stephen Brennock of oil broker PVM.

Energy hungry India now imports more than 82 percent of crude oil for its domestic requirement and about 62 percent of its (Indian) oil imports come from Saudi Arabia and other middle eastern countries like Iran, Iraq and Kuwait.

However, in a recent report, Reuters quoted a us government official as saying the Trump administration is "in the midst of an internal process" of considering waivers for countries that are reducing imports of Iranian crude. Analysts polled by S&P Global Platts expect the EIA to report a climb of 1.61 million barrels in crude supplies.

"There is growing concern that suppliers such as Saudi Arabia and Russian Federation will struggle to compensate for potential production declines from Iran and Venezuela, which has supported oil prices in today's trading session", said Abhishek Kumar, senior energy analyst at Interfax Energy in London.

USA light crude was up 40 cents at $74.69.

Among the reasons for reduced oil demand growth forecasts, the cartel cited potential headwinds for the world's economic growth, with growth trends starting to diverge between and within regions.

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