Oil prices rise after gas prices

Exchange-traded oil prices accelerated yesterday and rose by another 3% following a rapid increase in gas prices and amid a slow recovery in oil production and a reduction in oil and gasoline reserves in the United States.

November Brent crude futures rose 2.7% to 7 75.6/barrel yesterday (although they reached.76.1/barrel during the session), adding 9.7% for the month. October WTI crude futures rose 3.2% to 7 72.8/barrel, and in general for the month – by 8.7%.

The main reason for the increase in quotations remains the consequences of Hurricane Ida, which at the end of August caused damage to oil producers in the Mexican Strait of the United States, as a result of which oil production decreased by 1.7 million barrels/day, and processing – by 2.1 million barrels/day. The resumption of work is hindered by the new hurricane Nicholas, which covered Texas and Louisiana, as a result of which a large number of homes and businesses remain without electricity. During the week, oil production in the United States increased by 100 thousand barrels/day.

Currently, almost 40% of mining operations in the region are closed. The Energy Association EIA estimates that the total damage to U.S. production as a result of the hurricane amounted to about 30 million barrels, and a full recovery is possible in early October.

Commercial oil reserves in the United States during the week decreased by 1.5% or 6.4 million barrels to the lowest level in the last two years - 417.4 million barrels, and distillate and gasoline reserves – by 1.7 and 1.9 million barrels, respectively.

The rapid rise in gas prices in Europe also supports the oil market. Yesterday, October gas futures at the Dutch TTF hub reached 9 970/thousand cubic meters, which is 4 times higher than last year's price. But before the end of the session, the price dropped to 8 800/thousand cubic meters, which corresponds to the closing level of previous trading.

The rise in gas prices is a lever of pressure on the European authorities from Russia, which over the past three months has significantly reduced supplies in order to accelerate the launch of Nord Stream 2. Slow rates of gas injection into underground storage facilities, as well as a frosty winter, will also keep gas prices at a high level, which will contribute to an increase in the price of oil, which is an alternative source of heating.