Oil Prices Rise as Fresh Hurricane Triggers Supply Risks
Oil prices increased as pressure on supply side outweighed weak demand outlook amidst potential output rebalance by the OPEC+. Oil prices rise, with Brent crude inched higher by 1.3% at $74.18 a barrel and WTI up 1.5% at $71.44 a barrel.
The Organization of Petroleum Exporting Countries (OPEC) and its allies, known as the OPEC+, previously agreed to extend oil production cuts to November as crude oil and fuel prices continued to fall.
However, positive momentum continues in the global commodities market as tensions in the Middle East remain elevated alongside fresh hurricane threats.
The latest supportive measures announced in Beijing have further buoyed sentiment in the commodity complex, said ING commodities strategists.
Both WTI and Brent rose this morning with prices trading higher over 1% following the latest air strikes by Israel on Hezbollah targets in Lebanon, worsening the Middle East tensions.
The threats of a hurricane are setting in for the US and Mexico, with many facilities suspending operations as preventive measures.
ING analysts said there are suggestions that Shell Plc has curtailed production at the Appomattox project and the Stones oil field in the Gulf of Mexico amid bad weather, while Chevron Corp. also removed some crews from offshore installations.
Amidst uncertainties, European gas prices rose significantly with TTF front-month futures rising over 5% to close above EUR36/MWh as of yesterday.
Gas prices continued to trade higher for a second consecutive session following the forecasts for colder weather, with temperatures falling below the seasonal norm in parts of Europe through the start of October, potentially boosting gas demand for heating purposes.
Meanwhile, persistent threats on gas pipeline imports also kept the supply risks elevated. In Norway (Europe’s largest supplier) several unplanned outages are compounding the impact of seasonal works at gas facilities.
Brent crude was at $73.81 per barrel on Monday. US benchmark West Texas Intermediate was priced at $71.12 per barrel after closing at $71 in the prior session. The market players are closely watching the events in the Middle East, where most of the world’s oil reserves are located.
Last week, the Fed lowered its interest rate by 50 basis points to a range of 4.75%-5.0%, starting its monetary easing aggressively.
The move marked the first rate cut by the central bank in more than four years, since the beginning of the Covid-19 pandemic. It pushed up hopes that lower rates would boost economic activity, in turn helping spur increased oil demand. #Oil Prices Rise as Fresh Hurricane Triggers Supply Risks
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