Meanwhile, Kemp suspects the price correction is largely over: File Image/Pixabay
While Hurricane Ida proved to be far less apocalyptic than many analysts predicted, a related concern that power outages and flooding in Louisiana caused by the storm will hurt crude demand caused oil prices to dip on Tuesday.
West Texas Intermediate was down 41 cents to $68.80 per barrel at 0245 GMT, while Brent futures for October, due to expire on Tuesday, were down 46 cents at $72.95 per barrel; the more active November contract fell 42 cents, to $71.81.
WTI declined 7.5 percent this month, the biggest monthly loss since October.
John Kemp, Reuters
The overall picture is of a full recovery postponed, but not derailed
Prices were also said to be affected by the idea that extended refinery outages will curb oil demand, and RBC analysts said in a note, "With companies currently assessing damages, a current timeline for how long shuttered capacity will be down is still uncertain."
However, energy companies are scrambling to get back to normal, with Murphy Oil on Tuesday stating it is re-staffing its platforms in the Gulf of Mexico and in the early stages of restoring output.
Indeed, Robert Yawger, director of the futures division at Mizuho Securities, was optimistic that the industry will bounce back sooner than later: "I'm looking for oil production coming back in a week and refineries coming back in two weeks."
Up until Ida, pundits were preoccupied with the Covid Delta variant affecting demand, but if Tuesday's events were any indication, there seems to be a growing sentiment that demand recovery will continue regardless of the variant.
John Kemp, commodities analyst at Reuters, noted on Tuesday that while portfolio managers sold petroleum for the eighth week in 10, "the sales were smaller than before, suggesting the recent bout of profit taking was drawing to a close."
He conceded that the main stumbling block of international passenger aviation likely won't be resolved until 2022, but "for oil consumption, the overall picture is of a full recovery postponed, but not derailed."
Even a Reuters poll of analysts who expressed concern over Delta and downwardly revised their forecast for Brent didn't do so by much: the 43 participants now peg Brent averaging $68.02 per barrel in 2021 compared to their forecast in July for $68.76.
Carsten Fritsch, analyst at Commerzbank, predicted a "gradual, unspectacular increase [in U.S. output], not strong enough to cause any headaches for OPEC+" - a reference to the Organization of the Petroleum Exporting Countries meeting on Wednesday to discuss an agreement to boost output by 400,000 barrels per day (bpd) per month starting from August until its current reductions of 5.8 million bpd are phased out.
Russia too is boosting output: Vagit Alekperov, head of Lukoil, announced on Tuesday that his company has restored more than half of oil wells mothballed in May 2020 and that it would continue to raise output in the former Soviet Union.