Oil Price Fundamental Daily Forecast – Shell, Chevron to Ramp Up Production Following Last Week’s Leak
U.S. West Texas Intermediate and international-benchmark Brent crude oil futures fell sharply on Friday, erasing the previous session’s speculative gains that were fueled by concerns over a potential supply disruption in the U.S. Gulf of Mexico.
Reports that the current outage would be short-term encouraged the specs to book profits. Meanwhile, recession fears continued to drive worries over lower demand.
On Friday, October WTI crude oil futures settled at $91.46, down $2.07 or -2.21% and December Brent crude oil finished at $95.78, down $1.37 or -1.41%. The United States Oil Fund ETF (USO) closed at $74.97, down $1.31 or -1.72%.
Shell Offshore Oil Output to Restart after Pipeline Fix
A damaged oil pipeline component that disrupted output at several offshore U.S. Gulf of Mexico platforms were repaired late Friday, a Louisiana official said and Reuters reported, with producers moving to reactivate some of the halted production.
A failed flange connecting two onshore pipelines operated by Shell Plc in Louisiana leaked an estimated two barrels of oil, Reuters reported. The oil, which spilled onto an area covered with gravel, has been removed, said Chett Chiasson, executive of the Greater Lafourche Port Commission, and the flange had been repaired by Friday evening, he said.
Initial Cause of Thursday’s Rally
WTI and Brent crude oil futures jumped on Thursday after an oil spill halted operation of two pipelines that bring oil from several production facilities off the Louisiana coast, curtailing about 600,000 barrels per day of output from Shell, Chevron Corp and Equinor, according to two people familiar with offshore operations.
Stopped Pipelines Back Online
Crude oil prices fell on Friday after news broke that the two pipelines shutdown on Thursday would be brought back online before the weekend.
According to Reuters, on Friday evening, the Amberjack and Mars pipelines that were stopped by the leak were back online and returning to normal service, after crews completed the repairs at the Fourchon booster station, Shell spokesperson Cindy Babski said.
Ramped Up Production Could Weigh on Crude Prices Early Next Week
Reuters also reported that Shell is in the process of ramping up production at its three platforms that deliver Mars sour crude, an oil grade popular with refiners in the United States and Asia, Babski said.
Chevron, which had three production facilities shut by the leak, said it is ramping up production at its Jack/St. Malo, Tahiti and Big Foot platforms. Meanwhile Equinor’s Titan platform was also disrupted.