Oil at one-week high as U.S. supply concerns dominate

© Reuters. FILE PHOTO: A maze of crude oil pipes and valves is pictured during a tour by the Department of Energy at the Strategic Petroleum Reserve in Freeport, Texas, U.S. June 9, 2016. REUTERS/Richard Carson

By Bozorgmehr Sharafedin

LONDON (Reuters) -Oil rose more than 1% on Monday, supported by concerns over shut output in the United States because of damage from Hurricane Ida, with analysts expecting prices to remain rangebound in a stable market over the coming months.

Brent crude rose 90 cents, or 1.2%, to $73.82 a barrel by 1049 GMT and U.S. West Texas Intermediate (WTI) crude was up 99 cents, or 1.4%, at $70.71.

Brent has held between $70 and $74 a barrel over the past 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.

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

"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," said Howie Lee, an economist at Singapore's OCBC bank.

Prices still found some support from Hurricane Ida's impact on 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 (NYSE:GS) 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 could rise in coming weeks.

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