Crude Oil Higher; Storms and IEA Forecast Help

© Reuters.

By Peter Nurse

AiVIF.com -- Oil prices traded higher Tuesday, climbing to a six-week peak, after the International Energy Agency predicted a sharp rebound in demand while another storm threatened U.S. Gulf of Mexico output.

By 9:35 AM ET (1335 GMT), U.S. crude futures were up 0.7% at $70.94 a barrel, while Brent futures were up 0.7% at $74.05 a barrel. 

U.S. Gasoline RBOB Futures were up 0.8% at $2.1872 a gallon.

The IEA released its latest overview of the crude market earlier Tuesday, and the Paris-based intergovernmental organisation saw three months of declining world fuel consumption from July to September due to the resurgence in Covid-19 cases.

That said, the agency then expects a sharp rebound in demand of 1.6 million barrels a day next month, with continued growth to the end of the year.

“Strong pent-up demand and continued progress in vaccination programs should underpin a robust rebound from the fourth quarter of 2021," the agency said in the report.

This follows on from the Organisation of Petroleum Exporting Countries lifting its global oil demand forecast for 2022 by almost 1 million barrels a day on Monday.

Turning to supply, Hurricane Nicholas may have weakened into a tropical storm but it is still threatening severe damage to Texas and Louisiana, key U.S. oil producing states, just two weeks after Hurricane Ida ripped through the region.

“Some producers have already evacuated staff from offshore platforms, and we will need to keep a close eye once again on downstream assets along the Gulf Coast,” said analysts at ING, in a note.

About 794,000 barrels per day, or more than 40% of the U.S. Gulf's oil and gas output remained offline on Monday as a result of Ida, according to offshore regulator Bureau of Safety and Environmental Enforcement.

The U.S. government responded to this by agreeing to sell crude oil from the nation's emergency reserve to eight companies, including Exxon Mobil (NYSE:XOM) and Chevron (NYSE:CVX), while China has announced the sale of just over 7 million barrels from its strategic petroleum reserves on Sept. 24, boosting the supply available in the world's second biggest oil consumer.

Later in the session traders will focus on the latest U.S. crude inventories data from the American Petroleum Institute.