WASHINGTON (DTN) -- New York Mercantile Exchange oil futures and Brent crude traded on the Intercontinental Exchange settled Monday's session higher. The U.S. crude benchmark moved above $70 barrel (bbl) after the Organization of the Petroleum Exporting Countries upgraded demand projections for the third quarter, citing robust recovery in transportations fuels across industrialized economies, and boosted its full-year demand outlook for 2022. Meanwhile, Tropical Storm Nicholas is tracking toward Texas refineries and crude export terminals.
Market participants continue to monitor TS Nicholas; DTN Weather gives a 40% probability of reaching hurricane strength with landfall seen north of Corpus Christi later tonight or early Tuesday. Located just 200 miles south of Houston, Corpus Christi is home to several refineries, including Citgo's 157,500 barrels per day (bpd) facility, Valero's 200,000 bpd facility and Flint Hills Resources 260,000 bpd refinery.
Heavy rainfall in southeast Texas and southern Louisiana are expected to be the primary impact from Nicholas, said DTN Weather. Analysts estimate the biggest impact from Nicholas will be on crude oil exports, with as much as 12 million bbl of oil potentially not exported during the week. Meanwhile, 48% or 883,755 bpd of offshore oil production in the U.S. Gulf of Mexico is still shut-in following Hurricane Ida, which made landfall on Aug. 29.
Further boosting gains for the oil complex, OPEC in its Monthly Oil Market Report released Monday morning held global oil demand projections for this year steady, forecasting annualized growth of 6 million bpd despite the rapid spread of the Delta variant across major economies. Global oil consumption in 2021 is now estimated to average 96.7 million bpd.
"Oil demand in 3Q '21 has proved to be resilient, supported by rising mobility and travelling activities, particularly in countries part of the Organization of Economic Cooperation and Development," said OPEC in their report.
The forecast echoed earlier estimates from the U.S. Energy Information Administration that left its full-year gasoline demand in the United States steady at 8.78 million bpd this month, unchanged from its August outlook. EIA nudged 2022 U.S. gasoline demand expectations closer to 9 million bpd.
Next year, OPEC expects global oil demand to grow robustly by around 4.2 million bpd, some 900,000 bpd higher compared to last month's assessment. Revisions were driven by both the OECD and non-OECD, as the recovery in various fuels is expected to be stronger than anticipated and further supported by a steady economic outlook in all regions. Oil demand in 2022 is now projected to reach 100.8 million bpd, exceeding pre-pandemic levels.
On the supply side, OPEC crude production increased by 151,000 bpd last month to 26.762 million bpd, according to secondary sources, with the largest monthly increase coming from Saudi Arabia and United Arab Emirates, up by a combined 124,000 bpd in August.
The largest downward adjustment was a 114,000-bpd decline in output from Nigeria to 1.271 million bpd, well below an allotted quota of at least 1.579 million bpd. Nigeria's oil infrastructure came under terrorist attacks last month from the militia group known as Movement for the Emancipation of the Niger Delta, or MEND, which demands a fairer distribution of the country's oil wealth. The militant group said it blew up Shell's major crude oil trunk line late August in Bayelsa state as part of its campaign "to cripple the entire oil and gas export of the Federal Republic of Nigeria." MEND called on the company to "vacate the Niger Delta region to avoid collateral damage to their investment and death to staff."
Shell confirmed an attack on its pipeline, saying it shut down some production "to avoid potential environmental impact," spokesman David Williams said.
MEND also claimed to have attacked a Chevron oil station in the Niger Delta region and threatened further attacks in other states in the Niger Delta region, as well as on offshore oil facilities.
On the session, NYMEX October West Texas Intermediate contract settled $0.73 higher at $70.45 bbl and Brent crude for November delivery added $0.59 for a $73.51 bbl settlement. NYMEX October RBOB futures gained 0.69 cents to $2.1609 gallon and front-month ULSD futures advanced 1.23 cents to $2.1583 gallon.
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