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Oil futures were slightly lower Friday, pulling back from seven-week highs, as crude production in the Gulf of Mexico makes a slow comeback from Hurricane Ida.
West Texas Intermediate crude for October delivery
CL00,
CLV21,
fell 41 cents, or 0.6%, to $72.20 a barrel on the New York Mercantile Exchange. November Brent crude
BRN00,
BRNX21,
the global benchmark, was off 36 cents, or 0.5%, at $75.31 a barrel on ICE Futures Europe.
WTI futures were on track for a weekly rise of 3.5%, while Brent was up 3.2%. Brent closed Thursday at a seven-week high, while WTI ended unchanged a day after it closed at its highest since July 30.
The Bureau of Safety and Environmental Enforcement late Thursday estimated that 28.2% of crude production in the Gulf of Mexico remains shut in, equal to around 513,878 barrels a day. More than 39% of natural-gas production is also shut in, equivalent to 878.63 million cubic feet of output, according to the BSEE.
The slow return of crude output following Ida, which made landfall on the Louisiana Gulf Coast on Aug. 29, has been credited with helping drive crude higher in September. But analysts said other structural factors also remain in play.
“While oil-market sentiment has clearly inflected more positively over recent weeks — over 27 million barrels have evaporated from the U.S. supply side of the equation — Hurricane Ida is not the driving force behind the bullishness,” said Michael Tran, analyst at RBC Capital Markets, in a note.
He observed that while WTI, the U.S. benchmark, has recently outperformed Brent, the discount for North American barrels remains wider than $3 a barrel, “meaning that though domestic balances have tightened considerably, the constructive tone to the market is being driven by more structural themes than simply hurricanes.”
