U.S. West Texas Intermediate and international-benchmark Brent crude oil futures are edging higher on Tuesday as energy firms and ports along the U.S. Gulf Coast brace from another test as Hurricane Zeta, the 11th hurricane of the season, bears down on the Gulf of Mexico. Gains are being offset, however, over fears of rising COVID-19 cases and increased crude supplies.
US Offshore Energy Producers Brace for Hurricane Zeta Impact
Reuters is reporting on Tuesday that BP, Chevron and Equinor evacuated oil workers and Royal Dutch Shell paused drilling as winds intensified to 85 miles-per-hour (136 kph). Pipeline operator Enbridge evacuated an offshore platform and on Tuesday plans to remove workers from a Louisiana natural gas processing plant.
A hurricane watch was issued for parts of Louisiana to the Mississippi-Alabama border by the U.S. National Hurricane Center (NHC). Zeta could hit the U.S. coast on Wednesday at or near hurricane strength, the NHC said.
Energy producers shut 16%, or 293,656 barrels per day (bpd) of oil and 6% of natural gas output, or 162.57 million cubic feet per day, according to data from the U.S. offshore energy regulator.
Sentiment Remains Subdued by Surge in Global Coronavirus Cases, Rising Supply
Prices were being underpinned by hurricane concerns, but capped by worries that a surge in global coronavirus cases would but a dent in crude oil demand at a time when supply is rising. The stalemate in Washington over coronavirus aid also weighed on market sentiment.
A wave of coronavirus infections sweeping across the United States, Russia, and Europe are an early indication that demand from this point onwards is really going to struggle to grow.
Meanwhile, Libyan production is expected to reach 1 million barrels per day (bpd) in the coming weeks, the country’s national oil company said on Friday, a quicker return than many analysts had predicted.
When it comes to hurricanes, traders know the drill. Prices are likely to firm over the short-run until the market knows where the hurricane will hit and how much damage it will have caused to production. Bullish traders would like to see a stimulus package agreed upon, but they’re not really counting on it until after the election.
OPEC+ should be watched. Not only because rising output in Libya could complicate efforts by them to restrict output to offset weak demand, but because there is still some uncertainty over how they will handle a potential steep drop in demand.
Finally, at 20:30 GMT, the American Petroleum Institute (API) will release its weekly inventories report. It is expected to show that U.S. crude stocks rose in the week to October 23, while gasoline and distillate inventories fell.
For a look at all of today’s economic events, check out our economic calendar.
This article was originally posted on FX Empire