U.S. oil prices suffer first loss in 4 sessions as Laura smacks Gulf Coast


As Hurricane Laura, one of the strongest hurricanes in years, hit Louisiana and Gulf Coast states, oil futures dropped. The slide in prices ended a three-session streak of increases in U.S. prices. But traders apparently bet on a fast recovery for the energy market.

“Historically, hurricanes lead to widespread shut-ins, but production is immediately restored within a matter of days, therefore, leading to little long-term supply disruption,” said Manish Raj, chief financial officer at Velandera Energy according to MarketWatch.

West Texas Intermediate crude for October delivery declined by 35 cents, or 0.8%, to settle at $43.04 a barrel on the New York Mercantile Exchange. October Brent crude, the global benchmark, declined 55 cents, or 1.2%, to $45.09 a barrel on ICE Futures Europe.

Hurricane Laura came ashore in the early hours Thursday, near the Texas-Louisiana border, as a Category 4 storm after achieving sustained winds of around 150 miles per hour. The National Hurricane Center said Laura since weakened to a tropical storm as it moved further inland over Louisiana and Arkansas Thursday afternoon.

The Interior Department’s Bureau of Safety and Environmental Enforcement on Thursday estimated that 84.3% of current oil production in the Gulf of Mexico was shut in, unchanged from a day earlier. It also said 60.1% natural-gas production was shut in Thursday, down from 60.9% a day earlier. Over 45% of total U.S. petroleum refining capacity is located along the Gulf Coast, according to the Energy Information Administration. Around 3 million barrels a day of U.S. refining capacity was closed or reduced, estimated JBC Energy, a Vienna-based consulting firm.

The reaction in oil prices to the hurricane and to data on Wednesday that showed large drops in U.S. crude and gasoline inventories has been “remarkably cool,” said Eugen Weinberg, analyst at Commerzbank, in a note. The EIA reported on Wednesday a fifth straight weekly decline in U.S. crude inventories, down 4.7 million barrels for the week ended Aug. 21. Gasoline supplies saw a weekly decline of 4.6 million barrels.

Source: MarketWatch