Oil scales six-week high as Nicholas hits U.S. Gulf

© Reuters. FILE PHOTO: An oil storage tank and crude oil pipeline equipment is seen during a tour by the Department of Energy at the Strategic Petroleum Reserve in Freeport, Texas, U.S. June 9, 2016. REUTERS/Richard Carson

By Laura Sanicola

(Reuters) - Oil prices rose on Tuesday, extending gains as Nicholas weakened into a tropical storm and the International Energy Agency said demand would rebound in the remainder of the year.

Brent crude was up 21 cents, or 0.3%, at $73.72 a barrel by 11:20 a.m. EDT (1520 GMT) after hitting a session high of $74.28. U.S. West Texas Intermediate (WTI) crude climbed 21 cents, or 0.7%, to $70.66 after touching a high of $71.22.

Both contracts have risen for three consecutive sessions and were trading at their highest levels since early August.

Nicholas is the second major storm to threaten the U.S. Gulf region in recent weeks, having made landfall as a Category 1 hurricane on Monday evening. The Gulf is still recovering from Hurricane Ida, with more than 40% of its oil and gas output remaining shut on Monday after that powerful Category 4 storm damaged offshore infrastructure and other critical energy facilities in Louisiana.

Royal Dutch Shell (LON:RDSa) on Tuesday shut production at an offshore oil platform due to heavy winds from Nicholas. Vessel traffic at some energy hubs was halted due to difficult weather conditions.

"There's going to be import-export issues because Houston is in a semi-flood zone," said Bob Yawger, director of energy futures at Mizuho.

After three months of declining global oil demand, rollouts of COVID-19 vaccines should rekindle appetite for oil that was suppressed by pandemic restrictions, especially in Asia, the International Energy Agency (IEA) said on Tuesday.

The IEA sees a demand rebound of 1.6 million bpd in October and continued growth until the end of the year.

Overall, the agency lowered its 2021 global oil demand growth forecast by 105,000 bpd to 5.2 million bpd but raised its 2022 figure by 85,000 bpd to 3.2 million bpd.

These forecasts are below those of the Organization of the Petroleum Exporting Countries (OPEC), which expects demand to grow by about 5.96 million bpd this year and 4.15 million bpd next year.

Protesters blocked an oil tanker from loading at the Libyan terminal of Es Sider on Tuesday, the National Oil Corporation's (NOC) media office and an engineer at the port said.

Details on China's plans to sell crude from its strategic reserves dampened price gains. China's state reserves administration said it would auction about 7.4 million barrels of crude on Sept. 24, the first batch of sales in a rare release of strategic inventories.