WTI eyes the psychological $70 level

• Oil prices remain elevated on the supply side and Hurricane Ida.
• US dollar remains on the backfoot following Fed's Powell's speech.

The price of a barrel of oil on Monday was slightly higher and West Texas Intermediate (WTI) crude oil extended higher on the reports from Hurricane Ida's arrival in Louisiana.

It is a Category 4 strength and gasoline prices have surged on expectation the area's refining cluster will be slow to return to full capacity.

At the close of Wall Street, WTI spot was trading 0.56% higher at $69.04 between a low of $67.70 and a high of $69.60.  

On the sixteenth anniversary of Hurricane Katrina's devastating hit on the city, Hurricane Ida made landfall near New Orleans on Sunday morning.

The reports had already been out on Friday which sent oil higher in combination with a softer US dollar due to the Federal Reserve's chairman Jerome Powell's dovish rhetoric. 

According to data from the Bureau of Safety and Environmental Enforcement, 1.72-million barrels of oil production from Gulf platforms, or 95% of the total, remains shut-in.

However, oil has not spiked as much as might had been anticipated.

Counterintuitively, traders are worried that the damage to the region's refining cluster would leave the oil without buyers.

The US Department of Energy on Monday said nine refineries capable of processing 2.3-million barrels per day of oil, 13% of US capacity, have shut in or reduced production because of the storm

Elsewhere, the virus continues to dent global mobility.

''The end of summer driving season is seeing road traffic declining for many regions in Europe,'' analysts at TD Securities explained.

''In the Americas, congestion is also nudging lower, but recent disruptions to mobility in China have proved short-lived, suggesting a more tepid impact on Chinese energy demand relative to market expectations.''

''This should ease concerns that OPEC+ may opt to pause their planned output hike in response to the delta-variant's impact, which should see the group of producers open up the spigots once more.''

As for positioning, WTI crude oil positioning was little changed on the week, seeing small increases to both longs and shorts, as prices hit the lows just below $62/bbl before swiftly bouncing back.

''Moving forward, with China containing the spread of the delta-variant, the impact to demand was likely less than originally anticipated, suggesting further long accumulation and short covering has taken place to finish this week,'' analysts at TD Securities explained.