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Oil prices rise after storm hits Gulf of Mexico, Bonny Light sheds $0.93

Oil prices rise as OPEC, allies agree deal to cut output by 10m barrels/day

Oil prices climbed on Monday as storms bore down on the Gulf of Mexico, shutting over half of its oil production, and on indications of progress in the development of a coronavirus treatment.

Brent crude oil futures edged up by 34 cents, or 0.77%, to $44.69 per barrel by 11:40 West Africa Time while U.S. West Texas Intermediate crude was up 32 cents, or 0.76%, to $42.66 a barrel.

At the previous session on Friday, Nigeria’s premium oil grade, Bonny Light depreciated by 93 cents or 2.11% to $43.12 per barrel. But another major national crude grade, Qua Iboe, posted a gain of 42 cents or 0.93% at $45.48 a barrel.

“Prices are taking their cues from Mother Nature this morning as two storms bear down on the Gulf of Mexico. Half of the region’s production has been shut down, though gains will be limited by the threat of a second prolonged COVID wave,” said Stephen Brennock of oil broker PVM.

Energy firms closed than over a million barrels per day (bpd) of offshore crude oil production in the U.S. Gulf of Mexico due to the twin threat from Hurricane Marco and Tropical Storm Laura. Workers have been rescued from more than 100 production platforms.

Read also: Oil prices fall on slow coronavirus recovery, Bonny Light loses $0.57

“While there is a focus on oil production at the moment, we will need to keep an eye on refining activity, which is vulnerable to flooding. The U.S. Gulf is a key refining hub,” said Warren Patterson, ING’s head of commodities strategy.

Also boosting prices was a report by the Financial Times that U.S. President Donald Trump is considering expediting an experimental COVID-19 vaccine currently developed by AstraZeneca and Oxford University.

Trump also praised Food and Drug Administration’s authorisation of a coronavirus treatment that uses blood plasma from recovered patients on Sunday, a day after he accused the agency of standing in the way of the rollout of vaccines and therapeutics for political reasons.

Oil price gains were capped, however, by a rise in the U.S. oil and natural rig count for the first time since March, with the addition of the most rig oil rigs in seven months as shale producers restart drilling.

Ronald Adamolekun

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Ronald Adamolekun

Ronald Adamolekun is a creative writer with a mixed bag of experience in fields as diverse as data journalism, financial reporting and editing.

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