The oil market slump did not last long. The decline in US production, temporarily affected by Hurricane Ida, has offset the increase in extractions decided by OPEC+, the organization following to the letter its policy of a gradual increase in its production capacity.
According to data from the U.S. Energy Agency (EIA), 96% of oil production in the Gulf of Mexico was shut down during the hurricane, a decrease in supply of nearly 1.7 million barrels per day (mbd). In terms of prices, this resulted in a "V-bottom", i.e. strong buying pressure that quickly erased the price decline of the second half of August.
Let's leave the United States for Europe, which is also paying the price of a tense energy market, but on the natural gas side. Gas prices are at record highs on the Old Continent, due to a combination of factors such as the recovery of economic activities, supply depressed by the health crisis, historically low storage levels and the failure of some vital infrastructure in Russia. This energy boom is trickling down to the price of electricity and oil.
As for the International Energy Agency (IEA) forecasts, the institution has once again revised downwards its estimate of oil demand this year due to a resurgence of Covid cases in Asia. At the same time, the IEA is pointing to the sharp decline in global stocks, which are currently sufficient to offset the supply-demand gap and which will not be replenished until early 2022 at best.
From a chart point of view, in weekly data, Brent crude oil prices are evolving close to their highest level of the year, a few steps away from USD 76 per barrel. The underlying trend is once again positive, as evidenced by the slope of the various moving averages on this time unit. However, the aforementioned level will have to be breached in order to release a new upside potential towards USD 80.