Oil rises as storm approaches Gulf of Mexico production hub

© Reuters. FILE PHOTO: A sticker reads crude oil on the side of a storage tank in the Permian Basin in Mentone, Loving County, Texas, U.S. November 22, 2019. REUTERS/Angus Mordant

By Noah Browning

LONDON (Reuters) -Oil prices rose on Friday, on track to post big gains for the week, on worries about supply disruptions as energy companies began shutting production in the Gulf of Mexico ahead of a possible hurricane forecast to hit on the weekend.

Brent crude futures rose 72 cents, or 1%, to $71.79 a barrel at 0855 GMT. U.S. West Texas Intermediate (WTI) crude futures climbed 80 cents, or 1.2%, to $68.22 a barrel.

For the week, Brent is on track for a rise of about 10% this week, its biggest weekly jump since June 2020. WTI is headed for a weekly gain of more than 9%, which would be its strongest rise since October 2020.

"Energy traders are pushing crude prices higher in anticipation of disruptions in output in the Gulf of Mexico and on growing expectations OPEC+ might resist raising output given the recent Delta variant impact over crude demand," Edward Moya, senior market analyst at OANDA told Reuters.

Companies started airlifting workers from Gulf of Mexico oil production platforms on Thursday and BHP and BP (NYSE:BP) said they had begun to stop production at offshore platforms as a storm brewing in the Caribbean Sea was forecast to barrel through the Gulf on the weekend.

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

The prospect of U.S. Gulf supply outages helped turn the market around from losses on Thursday, which had been partly spurred by output returning at a Mexican oil platform following a fatal fire.

"The market may have more immediate concerns, with a storm building in the Caribbean. It's expected to become a powerful hurricane and potentially wreak havoc in the Gulf of Mexico and Texas early next week," ANZ Research said in a note.

Prices for oil and other risky assets on Thursday were pressured by U.S. Federal Reserve officials' comments https://www.reuters.com/article/us-usa-fed-kaplan-idUSKBN2FR1IN that the central bank must get on with its stimulus tapering.