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Oil Ends Mixed As Fears Spike Over Hurricane Laura

CommoditiesAug 26, 2020 04:09PM ET
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Investing.com - Crude prices settled mixed on Wednesday as a sharp U.S. inventory drawdown was offset by worries about a potential slump in fuel demand from inactivity likely to be caused by a hurricane headed for the Big Oil state of Texas.

New York-traded West Texas Intermediate, the benchmark for U.S. crude futures, settled up just 4 cents, or 0.09%, at $43.39 per barrel.

London-traded Brent, the bellwether for global crude prices, closed the New York session down 22 cents, or 0.5%, at $45.64.

Up to 90 percent of U.S. crude production on the Gulf of Mexico, accounting for 1.5 million barrels per day, has been idled by Hurricane Laura, which was barreling toward the region as a Category 4 storm. News reports said Laura had potential for a 20-foot storm surge that forecasters said would be "unsurvivable" and capable of sinking entire communities. Authorities implored coastal residents of Texas and Louisiana to flee.

A bevy of refineries in southeastern Texas and southwestern Louisiana were also shutting, Platts reported. Among them were Motiva’s 600,000-bpd refinery and chemical operations in Port Arthur; ExxonMobil’s 366,000-bpd refinery in Beaumont; Total’s 225,500-bpd refinery in Port Arthur and Valero’s 335,000- bpd Port Arthur refinery.

Hurricane Laura is targeting Texas just as the US oil industry steadies from demand destruction caused earlier in the year by the coronavirus pandemic. 

The Energy Information Administration has reported a drawdown of nearly 30 million barrels from U.S. crude stockpiles over the past five weeks, suggesting that refiners were near to their typical summer time production of fuels despite life in the United States still being largely crimped by coronavirus-related precautions. But the shutdown in Texas, which operates 47 out of the 135 refineries in the country, could deal a fresh blow to demand for fuels.

Earlier on Wednesday, the EIA reported that crude inventories fell by 4.7 million barrels last week, versus expectations for a draw of 3.7 million barrels after a decline of  1.6 million the previous week. 

Oil stored at Cushing, Oklahoma, fell 279,000 barrels last week, the EIA said. Gasoline inventory dropped by a more than expected 4.6 million barrels.

"For a fifth week in a row, we’ve had a draw in crude stocks, and gasoline stockpiles have added to the bullish fervor as well with an outsize drop contrary to expectations," said Investing.com analyst Barani Krishnan. 

"Yet, the anemic price action tells us the market is more worried about the oil platform shut-ins on the U.S. Gulf Coast of Mexico over fears about Hurricane Laura."

Krishnan adds that there are more concerns about what the outage could do to demand than to production. 

"For the first time in more than a month, the EIA estimated a production hike of 100,000 barrels for last week. While that’s nothing in the grand scheme of things, it’s still something to keep in mind after the first double-digit climb in oil rigs in more than a year announced by Baker Hughes last week. 

“All in, the outlook for oil remains murky despite these gargantuan crude draws.”

Oil Ends Mixed As Fears Spike Over Hurricane Laura
 

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Comments (15)
Patron Silver
Patron Silver Aug 26, 2020 5:44PM ET
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waiting for numb_nut repubs to blame dems for laura
Alan Rice
Alan Rice Aug 26, 2020 2:33PM ET
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Is anything going to be done to stop people from destroying the Planet ??
Camaro Camero
Camaro Aug 26, 2020 2:33PM ET
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I will do a burnout in your honor while playing "Fuel" by Metallica. Party on, Garth!
Daniel Metcalf
Daniel Metcalf Aug 26, 2020 1:19PM ET
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What would possibly be a good thing to do in a situation such as this? Invest in oil stock? Futures?
Camaro Camero
Camaro Aug 26, 2020 1:19PM ET
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I did. Heavily. Honestly don't think it will be this low again. If you want value, it's there with ALMOST no downside. And in this market, you had BETTER be looking at the downside of every stock you buy!
Ja He
Ja He Aug 26, 2020 1:15PM ET
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Gas is about to go up starting tommorrow.
David Bennett
David Bennett Aug 26, 2020 11:32AM ET
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the declines each week are not moving the price. Don't worry about demand and keep the production down and rigs on the ground.
Camaro Camero
Camaro Aug 26, 2020 11:32AM ET
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It should be going up. It always does when they shut rigs down. Give it time. Kids are back in school, lots of fuel being burned = $$$ on their way.
Stephen Szpunar
Stephen Szpunar Aug 26, 2020 11:07AM ET
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TGA spending into infrastructure as supply already getting cut and demand increasing you don't just turn on the spigot, prices will boom and along with it solid energy companies with healthy balance sheets
raouf chaabini
raouf chaabini Aug 26, 2020 11:05AM ET
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BUYING  at  this  excessive  high  price  is  SUICIDLE . I  went  SHORT  just  7 minutes after  the  inventory  data  release  .  ALL  THE  BULLISH  NEWS  ARE  ALREADY  PRICED  IN  THE  MARKET .  I  might  ADD  other  SHORT  positions  later  today .
Stephen Szpunar
Stephen Szpunar Aug 26, 2020 11:05AM ET
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Increased tax revenue is going to come from Treasury General Account Spending into the Economy it currently stands at 1.7 trillion with all oil rigs coldstacked and consolidation in the industry you could see oil 100$ a barrel plus in next 2-4 years
Max Ho
Max Ho Aug 26, 2020 11:04AM ET
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OPEC should cut more barrel, oil price is too low
Muhammad Asif
Aseeph Aug 26, 2020 11:02AM ET
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gold technical expected price 1890
Matt Novakovich
Matt Novakovich Aug 26, 2020 10:49AM ET
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we need Biden to fix this with a war. democrats love wars
Quiryat Bautista
Quiryat Bautista Aug 26, 2020 10:49AM ET
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when was the last time a republican president wasn't in a war?
Rugged Bear
Rugged Bear Aug 26, 2020 10:49AM ET
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huh?
Mahdi Kerrar
Mahdi Kerrar Aug 26, 2020 10:43AM ET
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Demand is going up and will still keep go up post covid
Mahdi Kerrar
Mahdi Kerrar Aug 26, 2020 10:43AM ET
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Buy
Plopseven Schwartz
Plopseven Schwartz Aug 26, 2020 10:43AM ET
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Demand is stagnant. Production & inventories are falling.
Ravivarma yalagon
Ravivarma yalagon Aug 26, 2020 10:40AM ET
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sell
Imran Chaudhry
Imran Chaudhry Aug 26, 2020 10:37AM ET
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Sell or buy?
Scott Espeseth
Scott Espeseth Aug 26, 2020 10:36AM ET
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So how much of this is actual demand and that sold to China to be stored off shore in their many many ports?????
 
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