Crude Oil Higher; Tropical Storm Ida and Powell’s Speech in Focus By

© Reuters

By Peter Nurse — Crude oil prices strengthened Friday, set to post substantial gains this week, boosted by likely supply disruptions as Tropical Storm Ida heads toward the U.S. Gulf Coast.

By 9 AM ET (1300 GMT), futures were up 2.3% at $68.94 a barrel, on track for a weekly gain of more than 9%, while futures were up 1.9% at $71.52 a barrel, set for a more than 10% weekly win.

U.S. Gasoline RBOB Futures were up 1.9% at $2.2975 a gallon.

“The storm is expected to make landfall in Louisiana and possibly parts of Texas on late Sunday or early Monday. More than 50% of US refining capacity sits in the US Gulf Coast, leaving the risk of large supply disruptions to refined products,” said analysts at ING, in a note.

Adding to the supply concerns was the news late Thursday that Libya’s Arabian Gulf Oil Company, a subsidiary of the state-owned National Oil Corporation, will stop operations unless it receives its budget allocation for 2020 and 2021, potentially removing around 250,000 barrels a day from the global market.

Attention now turns to the Federal Reserve’s , particularly Chairman Jerome Powell’s speech later Friday, for clues into how the central bank may scale back bond purchases. This would likely have an impact on the dollar, which in turn would affect the crude market as a stronger greenback makes crude oil expensive against the domestic currencies.

Also of interest will be next week’s meeting of the Organization of the Petroleum Exporting Countries and its allies, a group known as OPEC+. 

The group of top crude producers is widely expected to press ahead with their planned revival of oil production when it meets on Sept. 1, as prices remain elevated. 

“OPEC+ will take some comfort in the fact that we have seen a fairly swift recovery in oil prices from the lows of last week. In addition, demand concerns would have likely eased following China’s apparently successful attempt to deal with the latest wave of Covid-19,” added ING.

Finally, the rig count data and the Commodity Futures Trading Commission’s figures on round off the day.

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