Brent crude oil gained 13 cents or 0.2 percent to $73.16 a barrel on Friday as at 10:27 am Nigerian time ahead of U.S Non-farm Payrolls report due later today.
Despite worries that the monthly report may be weaker than expected, analysts are predicting a further increase in oil prices given the current deficit in the global oil market and the continuous decline in US crude oil inventories.
“With an oil market still strongly in deficit for the remainder of the year, oil seems poised to rally further as OPEC+ signals discipline in easing cuts and as U.S. stockpiles continue to decline,” said Edward Moya, senior market analyst at OANDA.
Also, the increase in oil prices this week was partly due to the falling U.S dollar, which made it cheaper in other currencies, and the effect of Hurricane Ida oil offshore platforms.
“The prolonged U.S. Gulf production and Louisiana refining capacity outages, which are bound to carve a bigger hole in the already diminished U.S. oil stockpiles, as well as data showing continued strong domestic fuel demand recovery are supportive factors,” said Vandana Hari, energy analyst at Vanda Insights.
Hurricane Ida has cut off about 1.7 million barrels per day of crude oil production in the U.S Gulf of Mexico with the damages done to heliports and fuel deports disrupting the return of oil workers to offshore platforms.
Also, Louisiana refineries affected by Hurricane Ida could take several weeks to resume operations given the degree of damages done to electrical power and water.
Therefore, the global oil supply is expected to be affected in the near term, especially with the OPEC plus gradual and effective supply increase methodology.