Oil prices rose on Friday and are on track to post big gains for the week as concerns rose about supply disruptions as energy companies began shutting production in the Gulf of Mexico ahead of a possible hurricane forecast to hit on the weekend.
Brent crude futures were 1.69 per cent higher at $72.27 a barrel at 5.55pm UAE time. US West Texas Intermediate (WTI) crude futures climbed 1.97 per cent to $68.75 a barrel.
For the week, Brent is on track for an increase of more than 10 per cent, its biggest weekly jump since June 2020. WTI is headed for a weekly gain of more than 9 per cent, which would be its strongest rise since September 2020.
"Energy traders are pushing crude prices higher in anticipation of disruptions in output in the Gulf of Mexico and on growing expectations Opec+ might resist raising output given the recent Delta variant impact over crude demand," Edward Moya, senior market analyst at Oanda, told Reuters.
Companies started moving workers from Gulf of Mexico oil production platforms on Thursday and BHP and BP said they had begun to stop production at offshore platforms as a storm brewing in the Caribbean Sea was forecast to pass through the Gulf on the weekend.
Gulf of Mexico offshore wells account for 17 per cent of US crude oil production and 5 per cent of dry natural gas production. More than 45 per cent of total US refining capacity lies along the Gulf coast.
The prospect of US Gulf supply shortages helped to turn the market around from losses on Thursday, which had been partly spurred by output returning at a Mexican oil platform after a fatal fire.
"The market may have more immediate concerns, with a storm building in the Caribbean. It's expected to become a powerful hurricane and potentially wreak havoc in the Gulf of Mexico and Texas early next week," ANZ Research said in a note.
Prices for oil and other risky assets on Thursday were pressured by US Federal Reserve officials' comments that the central bank must get on with its stimulus tapering.