Oil Prices Struggle Ahead of Hurricane Michael

© Reuters. Oil prices decline

Investing.com - Crude prices edged lower on Wednesday, as investors watched Hurricane Michael, which has intensified to Category 4 storm and was barreling down on Florida.

Some of the storm's most significant early impact was to offshore energy production. U.S. producers in the Gulf cut oil production by about 40%, the Bureau of Safety and Environmental Enforcement said, as they evacuated personnel from 75 platforms in the region.

November West Texas Intermediate crude, the U.S. benchmark contract, slumped 74 cents, or around 1%, to $74.22 a barrel at 10:00 AM ET (1400 GMT) on the New York Mercantile Exchange.

Meanwhile, international benchmark Brent crude oil futures were at $84.20 a barrel on ICE Futures Europe, down 80 cents, or about 0.9%, as traders weighed the impact of pending U.S. sanctions on Iranian crude exports.

U.S. sanctions will target Iran's crude oil exports from Nov. 4 and Washington has been putting pressure on governments and companies worldwide to cut their imports to zero.

The sanctions are being reinstated after U.S. President Donald Trump pulled out of the Iran nuclear deal earlier this year.

Iran is the third-biggest producer in the Organization of the Petroleum Exporting Countries (OPEC), supplying around 2.5 million barrels per day (bpd) of crude and condensate to markets this year, equivalent to around 2.5% of global consumption.

Looking ahead, oil traders were awaiting inventory reports that were set to be released a day later due to the Columbus Day holiday, observed on Monday.

The American Petroleum Institute’s report is due out later Wednesday, while the Energy Information Administration’s data come out Thursday.

Analysts expect the EIA to report a climb of roughly 2.6 million barrels in crude inventories for the week ended Oct. 5.