Oil resumes rally as Hurricane Ida continues to squeeze supplies

Oil prices rose today, Tuesday, after a two-day drop, with Hurricane Ida’s continuing impact on U.S. crude oil production, despite three weeks since it reached the mainland.

New York’s West Texas Intermediate crude futures were up about $ 71 a barrel, after losing more than 3% in the past two sessions, while Brent is trading above $ 74.

Royal Dutch Shell Plc said production from two of its largest fields in the Gulf of Mexico will not resume until next year due to hurricane damage. The market is also focused on the global energy crisis, in particularly for natural gas, which could increase the demand for crude oil.

Oil has started to advance over the past four weeks, in partly due to the tightening of the market after the continuous interruptions in supply due to the storms that swept the Gulf of Mexico. U.S. crude oil inventories are expected to decline by more than 3 million barrels last week, according to a Bloomberg survey, which will reduce inventories to the lowest level recorded in 2018.

According to Bloomberg Intelligence, the power outage for Shell, the largest oil producer in the US Gulf, will cut off about 300,000 barrels of daily production capacity, or one in six barrels pumped into the region. The turmoil is forcing refineries and other buyers to seek alternative supplies.

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