By Laila Kearney
NEW YORK (Reuters) -Oil prices edged lower on Friday as U.S. Gulf of Mexico crude production resumed following disruptions caused by Hurricane Francine, while the country’s rig count jumped this week.
Brent crude futures lost 26 cents, or 0.3%, to $71.71 a barrel by 1:30 p.m. EDT (1730 GMT). U.S. West Texas Intermediate crude (WTI) <CLc1> shed 31 cents, or 0.3%, to $68.66. Both benchmarks rose by more than $1 a barrel earlier in the session.
As U.S. Gulf Coast production and refining activity resumes, investors have opted to offload oil contracts going into the weekend, said Bob Yawger, director of energy futures at Mizuho in New York.
“You could come back Monday and everything is fine – the refineries are running at 100%, everyone is back on the platform, oil comes back and gasoline is coming out of the refinery – and the market could potentially pull back exponentially,” Yawger said.
Still, oil futures are expected to break a streak of weekly declines following sharp storm-related increases earlier in the week. Brent is on track for a weekly increase of about 1% while WTI is poised to register a roughly 1.5% gain.
Official data showed as of Thursday, the storm nearly shut in 42% of oil production in the region that accounts for about 15% of U.S. output.
“These cuts are expected to prove brief and within the broader context are unlikely to spur much movement in the crude balances given the importance of shale production that accounts for the major portion of U.S. output,” Ritterbusch said.
Crude prices also took a hit from the U.S. rig count from energy services group Baker Hughes, which reported the biggest weekly rise in oil and natural gas rig in a year. [RIG/U]
The oil and gas rig count rose by eight in the week to Sept. 13 to 590, returning to mid-June levels. The increase was the biggest since the week to Sept. 15, 2023.. Crude oil rigs rose by five to 488 this week, while gas rigs rose by three to 97.
Both the Organization of the Petroleum Exporting Countries and the International Energy Agency lowered their demand growth forecasts this week, citing economic struggles in China, the world’s largest oil importer.
U.S. oil stockpiles also rose across the board last week as crude imports grew and exports dipped, while fuel demand weakened, the Energy Information Administration (EIA) said on Wednesday.
Investors are looking ahead now to the U.S. Federal Reserve’s two-day policy meeting next week. It is widely expected to cut interest rates on Wednesday.
(Additional reporting by Arunima Kumar in Bengaluru, Trixie Yap in Singapore and Shariq Khan in New YorkEditing by Paul Simao and Marguerita Choy)