Oil prices rally as storm approaches Gulf of Mexico

Oil prices rose sharply on Friday and were on track to post big gains for the week on worries about near-term supply disruptions.

Benchmark Brent crude futures climbed 1.2 per cent to $71.05 a barrel, after having fallen 1.6 per cent on Thursday. US West Texas Intermediate (WTI) crude futures were up 1.5 per cent at $68.42 after suffering a 1.4 per cent loss in the previous session.

WTI is headed for a weekly gain of more than 8 per cent, which would be its strongest rise since early February.

Brent is on track for a rise of more than 9 per cent this week, marking the biggest weekly jump since June 2020 on relief that China has contained an outbreak of the Delta variant, thanks to mass testing strict quarantine policies.

Investors assessed the prospect of supply outages as energy companies began shutting in production in the Gulf of Mexico ahead of a potential hurricane forecast to hit on the weekend.

BHP and BP said they have begun to stop production at offshore platforms as a storm was brewing in the Caribbean Sea. The storm is expected to enter the Gulf of Mexico tonight and will be hit by a powerful hurricane this weekend, according to the National Hurricane Center.

Gulf of Mexico offshore wells account for 17 per cent of US crude oil production and 5 per cent of dry natural gas production. Over 45 per cent of total US refining capacity lies along the Gulf Coast.

Source: GNA