Oil mixed amid concerns about excess supply as rigs shut over storm

Tokyo — Oil prices were mixed on Monday with US crude rising as a tropical storm in the Gulf of Mexico forced rigs to shut down, but the gains were kept in check by wider concerns about excess supply and falling demand for fuels.

US West Texas Intermediate (WTI) crude futures were up 9c, or 0.2%, at $37.42 a barrel by about 2.50am. Brent crude was down 3c at $39.80 a barrel.

Both contracts ended last week lower, a second consecutive week of declines.

Tropical Storm Sally gained in strength in the Gulf of Mexico west of Florida on Sunday and was poised to become a category 2 hurricane. The storm is disrupting oil production for the second time in less than a month after hurricane Laura swept through the region.

Typically oil rises when production is shut but with the coronavirus pandemic getting worse demand concerns are to the fore, while global supplies continue to rise.

“A lacklustre driving season in the US has seen the market reassess its view of US demand,” ANZ Research said in a note. Also “with US refiners now shutting down for maintenance, crude demand is likely to remain soft”.

The US is the world’s biggest oil consumer and producer.

BP and Equinor evacuated staff from some offshore platforms on Sunday after similar moves by Chevron and Murphy Oil the day before.

In Libya, commander Khalifa Haftar committed to ending a months-long blockade of oil facilities, a move that would add more supplies to the market, though it was unclear if oilfields and ports would begin operations.

Reuters