Oil Extends Gains As Outages Persist In Gulf Of Mexico

Meanwhile, South Sudan oil exports could resume soon: File Image/Pixabay

Oil traders earlier accused by analysts of being overly bearish caused crude to extend gains on Tuesday, with of Gulf of Mexico output still offline in the aftermath of Hurricane Francine, and expectations mounting for the U.S. Federal Reserve to reduce borrowing rates.

As of 1730 GMT, Brent rose by $1.25 to $74 per barrel while West Texas Intermediate gained $1.50 to $71.59.

Ahead of the Fed's interest rate decision, three U.S. senators called on the central bank to reduce the interest rate by 75 basis points to protect the economy; analysts think there is a 70 percent probability that the Fed will cut rates by 50 basis points during the meeting scheduled for Wednesday.

Svetlana Tretyakova, senior analyst at Rystad Energy, said, "Expectations of a US Federal Reserve rate cut are gaining momentum, which could be good news for demand."

As for the Gulf outages, the Bureau of Safety and Environmental Enforcement estimated that over 200,000 barrels per day (bpd) remained offline; the agency noted that production from undamaged facilities will be brought back online immediately after checks have been completed.

While this week's oil trading appears even-keeled, the echoes of the previous week's calamitous activity is still driving a lot of news, with Bloomberg reminding readers that "The number of long contracts held by swap dealers on global benchmark Brent jumped by almost 50,000 lots last week, the most since March 2023 and the third-largest increase on record; for Europe's diesel benchmark, swap dealer longs were the highest since 2020."

In other oil news on Tuesday, South Sudan president Salva Kiir's office said in a statement that progress is being made in talks to resume South Sudanese crude oil exports via a port in Sudan, following months of shut-in crude flows due to a ruptured pipeline in that war-torn country.

The statement read, "Foreign Affairs Minister Ramadan Abdalla Mohammed Goc confirmed that Sudanese engineers have accomplished the necessary technical preparations for the resumption of oil production."