Oil up, off session highs after Ida; OPEC+ looks to boost output

© Reuters. FILE PHOTO: A pump jack operates in front of a drilling rig at sunset in an oil field in Midland, Texas U.S. August 22, 2018. REUTERS/Nick Oxford/File Photo

By Jessica Resnick-Ault

NEW YORK (Reuters) -Oil edged higher on Monday, but remained below session highs as Hurricane Ida weakened after forcing shutdowns of U.S. Gulf oil production, and OPEC+ looked set to go ahead with a planned oil output increase.

Within 12 hours of coming ashore, the storm had weakened into a Category 1 hurricane. Nearly all offshore Gulf oil production, or 1.74 million barrels per day, was suspended in advance of the storm.

The storm's move inland shifted the focus to when oil refiners can restart and produce fuels after heavy winds and rains. [REF/OUT]

"We're in wait-and see mode on how badly the refiners will be impacted by the power outages," said John Kilduff, a partner at Again Capital Management in New York. "There's going to be an accounting to be done later this week as damage is assessed - I would give it some time to breathe, like a fine wine," he said.

Brent crude rose 49 cents a barrel, or 6.7% to 73.19 by 12:24 ET (1624 GMT), having reached $73.69 earlier, the highest since Aug. 2. U.S. crude rose 37 cents, or 0.51% to $69.11 a barrel, having earlier touched $69.64, the highest since Aug. 6.

U.S. gasoline was up almost 2%, lending support to crude. Power outages added to refinery closures on the Gulf coast and traders weighed the possibility of prolonged disruptions.

"It's still early days," said Vivek Dhar, analyst at Commonwealth Bank of Australia (OTC:CMWAY). "Oil products, like gasoline and diesel, are likely to see prices rise more acutely from refinery outages especially if there are difficulties in bringing refineries and pipelines back online."

Brent has rallied 40% this year, supported by supply cuts by the Organization of the Petroleum Exporting Countries and allies, known as OPEC+, and some demand recovery from last year's pandemic-induced collapse.

OPEC+ meets on Wednesday to discuss a scheduled 400,000 bpd increase in its oil output, in what would be a further easing of the record output cuts made last year.

OPEC delegates say they expect the increase to go ahead, although Kuwait's oil minister said on Sunday it could be reconsidered.