By Laila Kearney
NEW YORK (Reuters) -Oil prices rose more than $1 a barrel on Friday, extending their rally and putting crude on course for a weekly gain on the back of output disruptions in the U.S. Gulf of Mexico after Hurricane Francine forced the evacuation of production platforms.
Brent crude futures were up $1.16 cents, or 1.6%, at $73.13 a barrel by 10:49 a.m. EDT (1449 GMT). U.S. West Texas Intermediate crude futures rose $1.24, or 1.8%, to $70.21.
If those gains hold, both benchmarks will break a streak of weekly declines despite Brent crude dipping below $70 a barrel on Tuesday for the first time since late 2021.
At current levels, Brent is set for a weekly increase of about 3% while WTI is poised to register a roughly 3.5% gain.
“Ongoing supply disruptions in Libya and larger-than-expected disruption in the Gulf of Mexico due to Hurricane Francine keep the oil market tight,” said Giovanni Staunovo, an analyst at UBS.
“Further support is likely coming from short-covering activity as a result of rebounding prices.”
A weaker U.S. dollar also helped support oil prices. Dollar weakness makes dollar-denominated commodities cheaper for holders of other currencies.
Oil producers assessed damage and conducted safety checks on Thursday as they prepared to resume operations in the U.S. Gulf of Mexico after Francine, which has since been downgraded to a storm. Official data showed that nearly 42% of the region’s oil output was shut in as of Thursday.
The storm-based rally could be short-lived, however, considering the weather system failed to curtail onshore crude production, said Jim Ritterbusch, energy analyst at Ritterbusch and Associates.
“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.
Both the Organization of Petroleum Exporting Countries (OPEC) and the International Energy Agency (IEA) 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, 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 David Goodman, Louise Heavens and Paul Simao)
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