Oil tops $78 as Hurricane Ida threatens output

Oil tops $78 as Hurricane Ida threatens output

Perth: Oil prices rose to $78 a barrel on Monday, recouping some of the previous session’s near 3% loss, on concerns that a powerful hurricane would cut US oil and gas supplies.

Hurricane Ida roared toward the Gulf of Mexico on Sunday, where important oil fields are located, after killing 91 people and leaving at least another 60 missing in floods and mudslides in El Salvador.

US crude for December delivery rose 84 cents to $78.27 a barrel by 6:43am. The contract settled down $2.19 on Friday, after data showed the US jobless rate jumped more than expected to a 26-1/2-year high of 10.2% in October.

London Brent crude rose 76 cents to $76.63.

“Reports of tropical storms potentially impacting operations in the Gulf of Mexico would be supportive in the near term, but investors generally focus on economic and inventory data for direction," Australia & New Zealand Bank said in a research note on Monday.

Analysts said the dollar, which fell on Monday, also lent support to oil prices.

Hurricane Ida is expected to weaken gradually on Monday as it heads toward some of the oil and gas production facilities in the central Gulf, the US National Hurricane Center said.

The fast-moving hurricane led oil companies to begin evacuating workers on Sunday and prompted the nation’s only offshore oil port to stop taking foreign crude from tankers.

Despite the threat Ida poses to US oil supplies, analysts said oil prices are unlikely to stage a strong rally even if some capacity is shut in.

“A combination of ample spare refining capacity and plenty of crude in land and offshore storage reduces the chances that this storm will have a lasting impact on the oil price trajectory," JP Morgan’s energy analyst Lawrence Eagles said in a note on Monday.

Saudi Arabia, the world’s top oil exporter, plans to keep curbs on crude oil supplies steady in December to some of its customers in Asia, industry sources said on Monday.

Underscoring the slim chance that Opec would soon raise supplies, United Arab Emirates oil minister Mohammed al-Hamli said on Saturday that raising oil production was not currently on the agenda for the producer group.

Oil fell nearly 3% on Friday, after data showed unemployment in the US has risen above 10%, raising concerns about a drag on fuel demand.

The US Labour Department said employers cut 190,000 jobs in October, more than the 175,000 that markets had expected, bringing unemployment to 10.2%.

Analysts said investors were set to scrutinise trade reports from the world’s biggest exporters -- Germany, China and the United States -- to gauge if the recent economic revival is sustainable once governments and central banks curb the flow of easy money.