Meanwhile, the IEA predicts a sharp demand rebound for the remainder of 2021: File Image/Pixabay
More evacuation from offshore U.S. Gulf of Mexico platforms in response to tropical storm Nicolas heading towards the Texas coast resulted in another modest session of gains for crude on Tuesday - but the gains were capped by the end of the U.S. summer driving season and potential supply increases.
Brent rose 15 cents to $73.66 per barrel by 0048 GTM, while West Texas Intermediate climbed 23 cents to $70.68 per barrel.
Nicolas threatens to cause more infrastructure damage to Texas and Louisiana still recovering from Hurricane Ida, but Hiroyuki Kikukawa, general manager of research at Nissan Securities, said, "Concerns over Nicholas prompted buying as it is likely to hit the area devastated by Ida, though the force is not expected to be as strong as Ida."
Hiroyuki Kikukawa, Nissan Securities
The force is not expected to be as strong as Ida
Kikukawa added, "But market upside will be limited as U.S. summer driving season waned and there are potential supply increases from planned releases of oil from strategic reserves in the United States and China as well as the possible resumption of oil export by Iran."
Although most analysts think Iran won't be an issue anytime soon, that stance was challenged on Sunday when the United Nations atomic watchdog reached an agreement with Tehran about overdue servicing of monitoring equipment - which could theoretically pave the way for a resumption in talks between the Islamic republic and the U.S.
As for China, its state reserves administration announced on Tuesday it would auction around 7.38
million barrels of crude oil (mostly from the Middle East) on September 24, marking its first ever public sale of strategic oil inventories.
A Beijing-based oil trader who estimated the oil was bought at an average of $40 per barrel said, "By auctioning some of the lowest-cost reserves, the sales may help cool prices but also make a profit - killing two birds with one stone."
Overall, the International Energy Agency on Tuesday said the global oil market will have to wait until October for additional supplies to compensate for the damage done by Ida: "Unplanned production outages have temporarily halted an uptrend in world oil supply that began in March, but growth is set to resume in October," said the Paris-based agency.
The IEA went on to note that while world fuel consumption will contract by 310,000 barrels per day (bpd) on average each month from July to September due to rising Delta variant infections, the Covid resurgence is abating and the agency expects a sharp demand rebound of 1.6 million bpd next month, with continued growth to the end of the year.