Oil prices settle lower, but record weekly gains

Oil prices fell at settlement, Friday, September 13, as US crude production resumed in the Gulf of Mexico after the disruptions caused by Hurricane “France”, while the number of rigs in the country jumped this week.

Brent crude futures fell 36 cents, or 0.5%, to settle at $71.61 a barrel, but achieved weekly gains of about 0.77%, according to “CNBC”.

US crude futures fell 32 cents, or 0.46%, to settle at $68.65 a barrel, but achieved weekly gains of about 1.45%.

Both benchmarks rose by more than a dollar a barrel earlier in the session.

With the resumption of production and refining activity in the US Gulf Coast, investors chose to get rid of oil contracts before the end of the week, according to Bob Yawger, director of energy futures at Mizuho in New York, told Reuters.

“You could come back on Monday and everything is fine — refineries are running at 100%, everyone is back on the platform, oil is coming back and gasoline is coming out of the refinery — and the market could fall back significantly,” Yawger said.

Official data as of Thursday showed the storm had shut in about 42% of oil production in the region, which accounts for about 15% of U.S. output.

“These declines are expected to be short-lived and in the broader context are unlikely to spur much movement in crude stocks given the importance of shale production, which accounts for the bulk of U.S. production,” Ritterbusch said.

Crude prices were also weighed by the announcement by energy services group Baker Hughes that it had the largest weekly increase in oil and natural gas rigs in a year.

The oil and gas rig count rose by eight in the week to Sept. 13 to 590, returning to mid-June levels.

The increase was the largest since the week ended Sept. 15, 2023. Crude oil rigs rose by five to 488 this week, while gas rigs rose by three to 97.

Both the Organization of the Petroleum Exporting Countries and the International Energy Agency cut their demand growth forecasts this week, citing economic difficulties in China, the world’s largest oil importer.

The Energy Information Administration said on Wednesday that U.S. oil inventories also rose broadly last week as crude imports grew and exports fell, while fuel demand weakened.

Investors are now awaiting the U.S. Federal Reserve’s two-day monetary policy meeting next week. The bank is widely expected to cut interest rates on Wednesday, Sept. 18.