Oil prices rise to one-week high as US supply concerns dominate

Oil rose on Monday, supported by concerns over shut output in the United States, the world's biggest producer, following damage from Hurricane Ida, while analysts expected a stable market in coming months.

Brent crude rose 62 cents, or 0.9%, to $73.54 a barrel at 0858 GMT, and U.S. West Texas Intermediate (WTI) crude was up 64 cents, or 0.9%, at $70.36.

Brent has been rangebound between $70 and $74 per barrel in the last three weeks.

"Oil prices may not have much room to rise in the near term, but at the same time are not expected to crash soon," said Stephen Brennock of broker PVM.

U.S. Energy Information Administration (EIA) said last week in a report that it expected Brent prices to remain near current levels for the remainder of 2021, averaging $71 per barrel during the fourth quarter of 2021.

"Markets still need clarity on the virus impacts beyond the very near term and until we get that, it seems like most assets, including oil, may continue to drift sideways," Howie Lee, an economist at Singapore's OCBC bank.

The prices still found some support from the impact of Hurricane Ida on the U.S. output. About three-quarters of the offshore oil production in the Gulf of Mexico, or about 1.4 million barrels per day, has remained halted since late August.

"Hurricane Ida was unique in having a net bullish impact on U.S. and global oil balances - with the impact on demand smaller than on production," Goldman Sachs analysts said in a note dated Sept. 9.

However, the number of rigs in operation in the United States grew in the latest week, energy service provider Baker Hughes said, indicating production may rise in coming weeks.

Beyond the impact of Ida, market attention will focus this week on potential revisions to the oil demand outlook from the Organization of the Petroleum Operating Countries (OPEC) and the International Energy Agency (IEA) as coronavirus cases continued to rise. OPEC will likely revise its 2022 forecast lower on Monday, two people familiar with the matter said.

Supply risks remain from China's planned release of oil from strategic reserves while the hope of fresh talks on a wider nuclear deal between Iran and the West was raised after the U.N. atomic watchdog reached an agreement with Iran on Sunday about the overdue servicing of monitoring equipment to keep it running.

China said on Monday it will announce details of planned crude oil sales from strategic reserves in due course.

(Reporting by Bozorgmehr Sharafedin in London, additional eporting by Naveen Thukral and Florence Tan; Editing by Kenneth Maxwell, Christian Schmollinger and Louise Heavens)