October 5, 2022

Oil Price Fundamental Daily Forecast – Shell and Chevron to Increase Production After Last Week’s Leak

U.S. crude oil futures West Texas Intermediate and international benchmark Brent fell sharply on Friday, wiping out speculative gains from the previous session that had been fueled by worries about a potential Gulf of Mexico supply disruption in the US. United States.

Reports that the current outage would be short-lived encouraged specs to post profits. Meanwhile, recession fears continued to fuel concerns about falling demand.

On Friday, October WTI crude oil futures settled at $91.46, down $2.07 or -2.21% and December Brent crude oil ended 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 production to restart after pipeline repairs

A damaged pipeline component that disrupted production at several U.S. offshore platforms in the Gulf of Mexico was repaired on Friday night, a Louisiana official said and Reuters reported, as producers prepare to reactivate part of production interrupted.

A failed flange connecting two onshore pipelines operated by Shell Plc in Louisiana leaked about two barrels of oil, Reuters reported. The oil, which spilled on a gravel-covered area, was removed, said Grand Lafourche Harbor Commission executive Chett Chiasson, and the flange had been repaired Friday night, 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 carry oil from several production facilities off the Louisiana coast, reducing output of about 600,000 barrels per day from Shell, Chevron Corp and Equinor, according to two people. familiar with offshore operations.

Stopped pipelines brought back online

Crude oil prices fell on Friday after news broke that the two pipelines closed on Thursday would be back in service before the weekend.

The Amberjack and Mars pipelines that were shut down by the leak were brought back online and back to normal service on Friday evening, according to Reuters, after crews completed repairs at the Fourchon booster station, the gate said. -Shell spokesperson, Cindy Babski.

Ramp-up in production could weigh on crude prices early next week

Reuters also reported that Shell was ramping up production at its three platforms that deliver sour crude from Mars, a grade of oil popular with refiners in the United States and Asia, Babski said.

Chevron, which had three production facilities shut down by the leak, said it was ramping up production at its Jack/St. Malo, Tahiti and Big Foot platforms. Meanwhile, Equinor’s Titan platform was also disrupted.