Oil Rises as Hurricane Idalia Sends Negative Signals
Brent crude and West Texas Intermediate oil prices increased as Hurricane Idalia jitter sent new signals that supply would tighten. West Texas Instruments (WTI) crude for October delivery closed up US$1.06 to US$81.16a per barrel.
Also, October Brent crude, the global benchmark, was last seen up US$0.99 to US$85.41. Idalia strengthened to hurricane status as it readies for landfall in Florida on Wednesday, with hot water temperatures in the gulf expected to result in a rapid strengthening of the storm.
The National Hurricane Center said the extremely warm waters and further consolidation of Idalia “all strongly point to rapid intensification”. It warned of storm surges of up to 12 feet on parts of Florida’s western shoreline.
The storm could force evacuations from production platforms in the eastern gulf, however, the Bureau of Safety and Environmental Enforcement is not reporting any shutdowns.
Supplies remain tight as Saudi Arabia’s one-million barrel per day of export cuts, to last through September, winnow global inventories while magnifying the effect of other supply disruptions. Demand remains high, with China reporting aviation-fuel demand in the country climbed above pre-Covid levels last week.
“Crude oil, currently stuck around $85 in Brent and $80 in WTI continues to look to a tight product market for support, not least jet fuel with China flights having surged 13% above pre-COVID levels in the week ending 20 August. Overall, the demand outlook in the coming months remains clouded with uncertainty and will in our opinion cap the upside potential,” Saxo Bank noted.
Rumours China is readying additional steps to boost its flagging economy also offered support for oil.
“Oil caught a bid earlier this morning after reports hit the tape that China’s largest banks were preparing to cut interest rates on existing mortgages and deposits, taking effect as early as today.
However, the move did not appear to be the big bazooka global markets were looking for, aka, a big infrastructure spending plan,” Robert Yawger, executive director for energy futures at Mizuho Securities USA, said in a note. #Oil Rises as Hurricane Idalia Sends New Signals