Oil holds near 5-month peak as hurricane approaches
Oil holds near 5-month peak as hurricane approaches – Oil prices remain near 5-month peak on Hurricane news and improving demand
Oil prices held near a 5-month peak as Hurricane Laura approached Key refinery facilities on the US Gulf Coast and private sector data in the US showed energy demand was starting to pick up.
Oil futures for October remained flat in the New York market after rising 1.7% on Tuesday. The storm is expected to arrive off the coast of Louisiana, Texas, on Wednesday evening or Thursday morning, according to the National Hurricane Center. 84% of oil production on the Gulf Coast has been halted and a refining capacity of close to 3 million barrels per day has been suspended.
U.S. oil stocks fell by 4.52 million barrels last week and fuel stocks fell by 6.39 million barrels, according to data from the U.S. private-sector funded American Petroleum Institute (API). If official data to be released on Wednesday evening confirms private sector data, inventories will also have fallen for a fifth consecutive week.
Hurricane Laura is likely to render some major refineries unusable and damage the global energy flow. According to a natural disaster modeler working at Enki Research, the hurricane could lead to as much as 10-12% of U.S. refinery capacity being closed for more than 6 weeks if it follows its current course.
The number of tankers carrying gasoline from Europe to the United States has yet to rise before the hurricane hits the coast.
The hurricane is expected to have only a short-term impact on global oil prices, but this year’s lackluster summer season is about to end and the recovery in consumption remains uncertain due to the pandemic.
While aircraft fuel lagged far behind last year’s figures, gasoline demand in key countries was stuck at a 10-15% low of last year’s consumption figures.
“The impact of the hurricane will be short-lived,” said Mizuho Research Institute economist Jun Inoue, “oil prices will continue to rise as long as stock surpluses are used, but it seems difficult for West Texas oil to rise above $ 50 per barrel this year.”
October Futures West Texas Oil (WTI) was horizontal on the NYMEX market at $ 43.36 per barrel at 11:51 a.m. Singapore time. The contract hit its highest close since March 5 at $ 43.35 on Tuesday.
Brent oil for October settlement was up 0.3% higher at $ 45.99 a barrel on the London ICE Futures Europe market, after closing 1.6% on Tuesday at the 5-month high.