Crude Oil Futures on Track for Weekly Gain on U.S. Economic Recovery
Crude Oil Futures on Track for Weekly Gain on U.S. Economic Recovery Reuters

Crude oil futures advanced Monday as U.S. companies shut down nearly a quarter of oil and natural gas production in the Gulf of Mexico because of the intensifying weather caused by Tropical Storm Debby.

Light sweet crude for August delivery gained 0.63 percent or 50 cents to $80.26 a barrel in electronic trading on the New York Mercantile Exchange during Asian trading hours. Brent crude oil futures for July delivery rose 0.49 percent or 45 cents to $91.43 a barrel on the ICE futures exchange in London.

According to the estimates of the U.S. Bureau of Safety and Environmental Enforcement (BSEE), Approximately 22.7 percent of the gulf's current daily crude oil production, which represents about 313,775 barrels per day, and 22.9 percent of its current daily natural-gas production, which represents about 1.03 billion cubic feet per day, has been shut-in due to Tropical Storm Debby.

The BSEE said that oil and gas operators had been evacuated from a total of 61 production platforms, equivalent to 10.2 percent of the 596 manned platforms in the Gulf of Mexico.

If we have a reprieve from the storms, it's (the gain in prices is) going to be temporary as onshore U.S. oil and gas production is almost equivalent to its offshore volume after a strong growth in output from shale resources, Tony Nunan, a risk manager at Mitsubishi Corp, told Reuters.

Meanwhile, the prices were also lifted by bargain hunting after they fell more than 5 percent last week. Crude plunged to its lowest level in eight months Thursday as sentiment was dampened after soft global economic data with further drop in China and euro zone PMI manufacturing, slump in the U.S. Philly Fed Index and higher U.S. jobless claims. Swelling U.S. and global oil inventories amid sluggish demand also added to the downtrend.

The price of crude oil in New York trading has fallen more than 28 percent in the last two months on concerns over the deepening euro zone sovereign debt crisis and waning global oil demand while Brent has fallen to nearly $40 a barrel since hitting $128.40 in March.