Oil Gains Halts Due to Increase in Covid-19 And Return of Mexican Supplies

Oil settled lower on Thursday, August 26, halting a three-day streak of gains amid renewed demand concerns due to rising coronavirus cases and with Mexico restoring some production after a fire disrupted supplies.

The losses were limited due to the possibility of further disruptions to the supply side.

Energy companies have prepared for the possibility of a severe storm hitting the US Gulf Coast this weekend.

Brent crude settled down $1.18, or 1.6%, to $71.07 a barrel.

US West Texas Intermediate crude settled down 94 cents, or 1.4%, to $67.42 a barrel.

New delta-fueled coronavirus outbreaks have raised concerns about the strength of the global economic recovery.

Analysts said that oil was also affected by a broader decline in stock markets later in the day.

Mexico began restoring production after a fire on an offshore platform on Sunday halted more than 400,000 barrels per day of production.

By Tuesday, state oil company Petroleos Mexicanos Pemex had restored 71,000 bpd of production and is expected to add another 110,000 bpd this week.

Royal Dutch Shell, Chevron Corp, and other companies today began evacuating non-essential personnel from US offshore platforms in the Gulf of Mexico ahead of a storm expected to enter the Gulf this weekend.

The Organization of the Petroleum Exporting Countries meets on September 1 to decide on its policy amid calls from the United States to increase supplies to the market to help the global economic recovery.