The move down was likely due to investors squaring positions ahead of the U.S. jobs report, including non-farm payrolls, on worries it could be weaker than consensus forecasts, SPI Asset Management managing partner Stephen Innes told Reuters. The report is due later in the day.
Both Brent and WTI futures were on an upward trend as the week draws to a close, thanks to a weakening U.S. dollar and the ongoing impact from Hurricane Ida.
An estimated 1.7 million barrels per day of oil production remains shut in the Gulf of Mexico after Ida hit the region earlier in the week. Damaged heliports and fuel depots are hindering crews’ ability to return to offshore platforms, while continuous power outages in Louisiana are slowing down refinery re-openings and impacting fuel demand.
Fuel demand remains a focus for investors after an Organization of the Petroleum Exporting Countries and allies (OPEC+) meeting. The cartel said at the meeting, which took place earlier in the week, that it would move ahead with its plan to add 400,00 barrels per day (bpd) back to the market over the next few months. The decision was made amid rising numbers of COVID-19 cases globally.
“With the near-term OPEC+ catalyst out of the way, the focus shifts again to the shape of the fuel demand recovery, with some concern that it will be challenging to keep the market in deficit in 2022 if OPEC+ continues to add supply at the anticipated 400,000 bpd pace,” said Innes.