Meanwhile, Enbridge's U.S./Canada pipeline moves a step more towards completion: File Image/Pixabay
As expected, Hurricane Ida temporarily closing a huge portion of U.S. oil and refining operations led to slightly higher crude prices on Monday, and although West Texas Intermediate settled above $69 per barrel for the first time in over two weeks, it's still down over 6.5 percent for the month.
John Kilduff, founding partner at Again Capital, explained the relatively mild price rise by stating, "The reaction is mixed because we avoided the worst-case scenario," a reference to widespread fears that Ida could exceed Katrina in destructive power.
Kilduff added, "Supplies are tight, and that could impact prices, especially since we are moving into the peak period for storms, and weather worries are going to persist around the market for the next several weeks."
John Kilduff, founding partner, Again Capital
Supplies are tight, and that could impact prices
About 2.11 million barrels per day (bpd) of refining capacity - about 12 percent of the U.S. total - was was shut at plants along the Mississippi River, and although it's too early to determine how long the facilities will remain closed, Goldman Sachs on Monday said, "We expect a more rapid return of oil production than refining production in the region."
Andy Lipow, president of Lipow Oil Associates, suggested that "For a Category 4, you could be looking at four to six weeks or more of downtime for the refineries."
Meanwhile, Ed Morse, global head of commodities research at Citi, told Bloomberg television that he's bullish on oil for the next 3 months but bearish for 2022 and 2023, citing the likelihood of the U.S. increasing output by 2 million bpd and the chance that it will reach a nuclear agreement with Iran, which might add a further 1.5 million bpd to the global market.
In other oil news on Monday, Petroleos Mexicanos (Pemex) said it has resumed 421,000 bpd in production and brought 125 wells back online following a fire at an offshore platform on August 22.
Also, a Minnesota appeals court on Monday rejected a challenge to a water permit, thus moving Enbridge Inc. one step closer to completing its Line 3 oil pipeline, the first new cross-border oil-sands conduit built between Canada and the U.S. in years.
The 760,000 bpd line will expand Canadian oil sands exports to the U.S. once it goes into operation as early as next month.