Brent crude oil extended its bullish run above $71 a barrel following reports that a fire outbreak killed oil workers on an oil platform operates by Petroleos Mexicanos, a Mexican oil firm, in the southern Gulf of Mexico.
The fire incident that killed five workers and injured six others cut off 421,000 barrels per day of crude oil production to bolster brent oil price by 3 percent in the last two days.
Since the incident, the oil platform has remained out of production and 125 wells are presently offline, according to Pemex Chief Executive Octavio Romero. Meaning, global oil supply dropped by 421,000 barrels per day this week.
“The market is getting a tailwind from the PEMEX fire, which has greenlighted this rally,” said Bob Yawger, director of energy futures at Mizuho in New York.
Brent crude oil gained $0.75 or 1.06 percent on Tuesday at 3:07 pm Nigerian time to trade at $71.80 per barrel.
Despite expected volatility, bank expects Brent crude oil to rise to about $75 per barrel by December 2021. This was after data from American Petroleum Institute showed the US crude oil inventories fell by 1.6 million barrels in the week ended August 20, 201.
Experts had predicted a 2.7 million barrels decline, a situation that would have dragged on crude oil price if not Sunday event in Mexico.
“While volatility looks set to continue, we see further gains for oil as global economic normalisation continues and OPEC remains disciplined on crude supplies,” said Mark Haefele, chief investment officer at UBS Global Wealth Management.
