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Oct 6, 2020

Energy | Oil Market Report: Oil jumps on hurricane approaching Gulf Coast, supply disruptions

 

2-3 minutes - Source: CNBC


Oil pumping jacks, also known as "nodding donkeys", operate in an oilfield near Almetyevsk, Tatarstan, Russia, on Wednesday, March 11, 2020.

Oil pumping jacks, also known as “nodding donkeys”, operate in an oilfield near Almetyevsk, Tatarstan, Russia, on Wednesday, March 11, 2020.

Andrey Rudakov | Bloomberg via Getty Images

Oil prices rose more than $1 a barrel on Tuesday, supported by U.S. supply disruptions caused by an approaching hurricane in the Gulf of Mexico and an oil worker strike in Norway.

Energy companies shut offshore oil platforms as Hurricane Delta strengthened to a Category 2 and was on track to reach the Gulf of Mexico on Thursday. It would be the 10th named storm to hit the United States this year, which would break a record dating back more a century.

Brent crude futures were up $1.40, or 3.41%, at $42.69 a barrel. West Texas Intermediate (WTI) crude settled $1.45, or 3.7%, higher at $40.67.

“The tropical storms are driving us up a bit with the shut-downs in production,” said Phil Flynn, senior analyst at Price Futures Group in Chicago.

Royal Dutch Shell Plc said it was evacuating nonessential workers from all nine of its offshore Gulf of Mexico operations and preparing to shut production.

Equinor ASA and BHP Group Ltd also shut in production and evacuated workers from platforms, the companies said.

Norway’s petroleum output has declined by 8% due to an oil worker strike. A major labor union in the country is trying to resolve the dispute with oil companies, which have shut six offshore oil and gas fields.

About 60% of the total cuts were in natural gas, with crude oil and natural gas liquids making up the rest, Reuters calculations show.

Risk assets also fed off U.S. President Donald Trump’s return to the White House following three days in the hospital for treatment for COVID-19.

House Speaker Nancy Pelosi and Treasury Secretary Steven Mnuchin spoke are prepared to talk on Tuesday in an effort to reach a compromise over a U.S. economic relief package.

“The oil market desperately needs that to get oil propped up and demand stoked,” said John Kilduff, partner at Again Capital LLC in New York.

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