Brent Hits $87 as Hurricane Disrupts US Output
Brent price hit $87 per barrel on Thursday as Hurricane disrupted crude oil output in the United States, the world largest consumer of hydrocarbon.
The global commodity market reacted to Hurricane Beryl which has started to threaten production while an already tight US inventory as reported by Energy Information Administration (EIA) has further helped the rally, according to ING commodity strategists – Ewa Manthey and Warren Patterson.
According to the EIA, US commercial crude oil stocks decreased by around 12.2 million barrels to 448.5 million barrels, compared to the market’s estimate of a decline of about 400,000 barrels. Over the same period, gasoline inventories fell by approximately 2.2 million barrels to 231.7 million barrels.
ICE Brent settled above US$87/bbl for the first time since mid-April yesterday, before giving up some gains in the early trading session today, analysts said.
Recent reports suggest that the hurricane is now disrupting US oil output, with companies like Shell Plc, BP Plc, and Exxon Mobil Corp evacuating some of their platforms in the Gulf of Mexico.
According to the data from the National Hurricane Center and the Bureau of Ocean Energy Management, around 73k b/d of federal offshore oil production is believed to be within the projected path of the storm.
Meanwhile, the weekly inventory report from EIA shows that US commercial crude oil inventories fell by 12.2 million barrels over the week, compared to market expectations of a drawdown of just 411k barrels. This was the biggest weekly decline since July 2023, ING said.
This leaves commercial crude oil inventories at 448.5m barrels, the lowest level since 22 March 2024, according to ING.
The noted added that crude oil exports rebounded by 491,000 b/d week-on-week to 4.4 million barrels over the reporting week following the reopening of the Port of Corpus Christi in Texas, the waterway that connects the largest crude-exporting terminals in the country to overseas markets.
Both benchmarks fell during early Asian trade following macroeconomic data released in the US on Wednesday, which gave negative signals about the country’s economic growth.
The latest data showed that private payrolls increased by 150,000 in June, below market expectations and annual wage growth also recorded the slowest increase since August 2021, at 4.9%.
The number of people applying for unemployment benefits for the first time in the US also increased by 4,000 to 238,000 in the week ending June 29 compared to the previous week, exceeding expectations.
The negative economic data in the world’s largest oil consumer put downward pressure on oil prices by causing demand concerns among market players.
The data also showed that US crude oil production declined by 27,000 barrels per day (bpd) to around 13.58 million bpd during the week ending June 28. The decrease in oil production reinforced supply concerns among market participants and helped push oil prices up. Sell Pressure Hits Nigerian 10-Year Bonds, Yield Rises
