Oil prices fell today, Tuesday, amid fears that power outages and flooding in the US state of Louisiana caused by Hurricane Ida will reduce demand for crude from refineries.
Prices were also pressured by weaker manufacturing data from China, where factory activity expanded at a slower pace in August 2021 compared to the previous month.
West Texas Intermediate crude futures fell 0.07% to $69.16 a barrel, by 05:55 GMT, giving up some of the gains made on Monday.
As for the futures contracts for “Brent” crude for October 2021 delivery, scheduled to end today, Tuesday, they fell by 0.04%, to $ 73.38 a barrel, after increasing yesterday, Monday, about one percent. The November 2021 contracts also fell 0.4% to $72.20 a barrel.
"The oil market is in a wait-and-see mode as the impact of Cyclone Ida is being assessed on both demand and supply," said Ravindra Rao, vice president for commodities at Kotak Securities.
He added, "Dealers in the market are reluctant to make big bets before the OPEC + meeting for review tomorrow."
Hurricane Ida halted at least 94 percent of offshore oil and gas production in the Gulf of Mexico and caused "catastrophic" damage to Louisiana's power grid.
Utility officials say the power outage could last up to three weeks, slowing efforts to repair and restart power facilities, which could take at least two weeks to fully resume operations.
Also dampening prices is the possibility that the Organization of the Petroleum Exporting Countries (OPEC) and its allies, known as OPEC+, will agree to press ahead with plans to add an additional 400,000 bpd to supplies each month from December.
OPEC + meets tomorrow, Wednesday. Delegates in "OPEC" say they expect the group to move forward with increasing production, although the Kuwaiti Oil Minister said last Sunday that it may be reconsidered in light of concerns about the outbreak of Covid-19 infections in Asia, which limits the demand for fuel.