Categories: CommoditiesNews

Hurricane Sally, API Report Drives Crude Oil Up

Crude oil rose for the second consecutive day of trading by roughly 2% as hurricane Sally closed US offshore oil and gas production.

More than 25% of operations closed. This occured to give way to the passing of the storm to the US Gulf Coast. The total outage’s estimated figure is between 3 million to 6 million barrels in approximately 11 days.

Brent crude gained 77 cents to $41.30 per barrel, translating to a 1.9% gain. Similarly, US benchmark West Texas Intermediate recorded a sharper hike by 2.2% or 85 cents, trading at $39.13 at early trading hours.

The storm-induced shutdowns are likely to result in slashed stockpiles, although refineries are also closed, thereby cutting demand.

Supporting the bullish trend, the American Petroleum Institute reports that crude oil inventories fell by 9.5 million barrels. This is a significant shift from analyst prediction increased stockpiles.

Last week, API reported an unexpected buildup of 3 million barrels per day. This was to the dismay of investors expecting a draw. Especially, since industry experts forecasted a draw amounting to 1.4 million barrels per day.

A week before that, the association records 6.4 million draws from a predicted figure of 1.89 million barrels per day.

For the record, the oil price has significantly dropped for the week. It hit below the $40 floor, primarily driven by rising coronavirus cases worldwide, a dampening outlook for more robust demand.

The Organization of the Petroleum Exporting Countries known as OPEC+ and International Energy Agency have all slashed their demand prospects for the week.

Related Post

OPEC+ members plan to convene the review of the supply pact tomorrow. Experts anticipate that the organization would unlikely decide to put further production cuts. Even when crude oil stock continues to outnumber orders.

Will Oil Stockpiles Shrink Soon?

One of the world’s biggest independent oil trader Vitol, assured that crude oil stockpiles would keep shrinking towards the end of the year.

The Dutch commodity group said that demand would likely stagnate and retain its volatility within a few months. Notably, before returning to growth on a gradual recovery next year.

The firm’s chief executive warned that recovery would be a bumpy but steady improvement is attainable.  

He added that current circumstances would worsen before it gets better, and the next two to three months will be a tipping point for most oil business frontrunners.

The oil industry’s key supporter will be Asian markets that will take global consumption to new highs between 2022 to 2024. Europe and US markets have a less bullish outlook in the next few years.

Global inventory buildup at the early onset of the virus peaked at 1.2 billion barrels per day. After production cut measures and easing mobility restrictions, stockpiles continued to relax, even recording successive draws from July to August.

Currently, the average inventories is significantly drawn down to only 300 million barrels per day. Analysts predict an optimistic outlook, anticipating the figure to drop to 250 million in the last four months of the year.

  • Support
  • Platform
  • Spread
  • Trading Instrument
Comments Rating 0 (0 reviews)

Recent Posts

Microsoft and the Video Game Industry’s Annual Trade Show

The E3 gaming expo kicked off two days ago and it will close its virtual doors on Saturday. The video…

14 hours ago

USD Hugely Steady as Fed Meeting Approaches

On Monday, June 14, USD was hugely steady in early European trade as traders are showing caution since the US…

16 hours ago

US Energy Information Administration Supports Supply Hike

One of the oil industry’s most trusted agencies, the US Energy Information Administration, calls on countries to increase production. In…

16 hours ago

After CPI Balloons, Is US Inflation Still Transitory?

After leading names like Janet Yellen and Jerome Powell quickly dismissed inflation fears, the US consumer price index in May…

17 hours ago

Bitcoin Smashed $40K as Tesla Resumes its Transaction

On Monday, June 14, Bitcoin reached a two-week high of $40,000. This is following Tesla CEO Elon Musk’s tweet that…

17 hours ago

Shell Gas Plans Sale of Holdings in Permian Basin for $10B

The oil giant Royal Dutch Shell gas is currently reviewing the sale of holdings in the Permian Basin. For reference,…

19 hours ago

This website uses cookies.