Oil prices dipped on Friday as crude production in the U.S. Gulf of Mexico resumed following Hurricane Francine, coupled with a rise in the U.S. rig count. Brent crude futures settled at $71.61 per barrel, down 36 cents, or 0.5%, while U.S. West Texas Intermediate (WTI) crude settled at $68.65 per barrel, a decline of 32 cents, or 0.5%.
With production and refining activities getting back to normal in the U.S. Gulf Coast, investors opted to sell off oil contracts ahead of the weekend. Bob Yawger, director of energy futures at Mizuho in New York, noted, “By Monday, the refineries could be running at full capacity, platforms operational, and oil and gasoline back in supply, potentially pulling the market back significantly.”
Despite Friday’s losses, oil futures finished the week on a positive note, reversing a streak of declines. Brent saw a weekly increase of around 0.8%, while WTI posted a gain of approximately 1.4%.
Hurricane Francine had temporarily shut down around 42% of oil production in the Gulf of Mexico, a region that accounts for 15% of U.S. output. However, analysts, including Ritterbusch, suggested these cuts would be short-lived and unlikely to significantly affect overall crude balances, given the dominant role of shale production in U.S. output.
Adding to the downward pressure, Baker Hughes reported the largest weekly increase in oil and natural gas rigs in a year. The total rig count rose by eight to 590 in the week ending Sept. 13, with crude oil rigs increasing by five to 488 and gas rigs by three to 97. This brought the rig count back to levels last seen in mid-June.
In addition, the U.S. Commodity Futures Trading Commission revealed that money managers reduced their net long crude futures and options positions by 27,493 contracts to 59,741 in the week ending Sept. 10, reflecting caution in the market.
