Oil prices hit six-week high on fears Storm Nicholas could cause further damage to US supply chain
- Storm Nicholas will wreak havoc as it moves along the Texas coast
- More than 40% of US Gulf oil and gas production is still shut down by Hurricane Ida
- Brent oil rose 48 cents, or 0.7%, to $73.99 a barrel at 0651 GTM
- West Texas Intermediate (WTI) also climbed 49 cents, or 0.7%, to $70.94 a barrel
Oil prices have reached a six-week high amid concerns that a new storm in the US could cause further damage to production in Texas.
More than 40 percent of US Gulf oil and gas production is still shut down by Hurricane Ida, and Storm Nicholas will now wreak more havoc as it moves along the Texas coast.
Brent oil rose 48 cents, or 0.7 percent, to $73.99 a barrel at 0651 GTM, on Tuesday, after rising to $74.18 earlier – the highest since Aug. 2 – as US West Texas Intermediate (WTI) crude also climbed 49 cents, or 0.7 percent, to $70.94 a barrel, after rising to $71.14 earlier.
Oil prices have hit six-week highs amid concerns that a new storm in the US could cause further damage to production in Texas
Brent gained 0.8 percent, while WTI rose 1.1 percent on Monday.
On Monday, evacuations were underway from offshore oil rigs in the Gulf of Mexico as onshore oil refineries began preparing for Tropical Storm Nicholas.
The storm headed toward Texas with winds of 70 miles per hour (113 kph) and endangered coastal towns in the state and Louisiana, which are still recovering from Hurricane Ida.
“Investors feared Nicholas would cause further disruption in the Gulf Coast at a time when they were trying to figure out how long Ida’s raw output would be affected,” said Satoru Yoshida, a commodities analyst at Rakuten Securities.
More than 40 percent of US Gulf oil and gas production went offline Monday, two weeks after Ida slammed into the Louisiana coast, according to the offshore regulator Bureau of Safety and Environmental Enforcement (BSEE).
Goldman Sachs said the hurricane had a greater impact on oil production than on refinery demand, which had a net “bullish” impact on US and global storage levels.
The investment bank in a Sept. 9 note described the blow to U.S. manufacturing as “historically significant” and expects nearly 40 million barrels of crude oil to be lost, with the challenges of restarting the Mars flow likely to run through mid-October. .
A satellite image shows Storm Nicholas over the Gulf of Mexico on September 12
The impact on refining was broadly in line with previous hurricanes, the bank said, with about 1.5 million barrels per day still offline and the recovery is likely to “follow the usual exponential pattern of the disruptions halving every 10 days.” ‘.
The price hikes also come amid concerns about the oil disruption in Libya.
National Oil Corp (NOC) said loading operations at the Libyan oil terminals of Es Sider and Ras Lanuf resumed Friday after a one-day hiatus, but an engineer at a port of Hariga said the port was still closed by protesters.
But Hiroyuki Kikukawa, director of research at Nissan Securities, expected the oil price hike to be short-lived.
The market’s uptrend may be limited as the summer season slowed in the US, while there is a potential increase in supply from planned releases of oil from strategic reserves in the United States and China, as well as the potential oil resumption. exports by Iran,” he said.
The US government agreed to sell crude oil from the country’s emergency reserve to eight companies, including Exxon Mobil and Chevron, as part of a planned auction to raise money for the federal budget.
Traders noted that China’s planned release of oil from strategic petroleum reserves could increase inventories of the world’s second largest oil consumer.
Hopes for talks over a broader Iran-West nuclear deal were raised after the United Nations nuclear watchdog reached an agreement with Tehran on Sunday over deferred maintenance of surveillance equipment.
In addition to price pressures, U.S. oil output from seven major shale formations is expected to rise about 66,000 bpd in October to 8.1 million bpd, the highest since April 2020, according to the Energy Information Administration’s monthly drilling productivity report.
The Organization of Petroleum Exporting Countries (OPEC), meanwhile, has lowered its forecast for world oil demand for the last quarter of 2021 due to the variant of the Delta coronavirus, while increasing the forecast for 2022 to 4.15 million bpd, compared at 3.28 million bpd in the previous month. report.