Oil Prices Up, Storms Hit Gulf of Mexico
Crude oil prices were up on Monday as storms closed in on the Gulf of Mexico. This shut more than half its oil production.
This also had a negative effect on coronavirus optimism after regulators approved the use of blood plasma from recovered patients. This was considered a treatment option.
Brent futures had gained 9 cents, or 0.2%, to $44.44 a barrel by 0634 GMT. U.S. West Texas Intermediate crude was up 9 cents, or 0.2%, to $42.43 a barrel. Both benchmark contracts rose early on commodities on Monday.
The Caribbean and Gulf of Mexico were hit by Hurricane Marco and Tropical Storm Laura on Sunday. This forced energy companies to pull workers from offshore platforms and shut down oil output.
Producers decided to 58% of the Gulf’s offshore oil output. Moreover, 45% of natural gas supply was shut on Sunday.
As with energy commodities, the region accounts for 17% of total U.S. oil production. In addition, it accounts for 5% of U.S. natural gas output.
Edward Moya, senior market analyst at OANDA in New York, said crude prices rose with the double trouble in the Atlantic. This could lead to huge disruptions with oil operations in the Gulf of Mexico.
Oil Gains Muted over Virus Uncertainty
Oil’s gains are likely to be muted, however. The uncertainty surrounding the virus continues to weigh on the crude demand outlook, Moya added.
On Sunday, U.S. President Donald Trump hailed FDA authorization for a coronavirus treatment. It uses blood plasma from recovered patients. This was a treatment that more than 70,000 patients have already received.
A day before the start of the Republican National Convention, Trump made this announcement in an evening news conference. According to Trump, the authorization will dramatically expand access to this treatment.
They’re years ahead of approvals if they went by the speed of past administrations and that includes vaccines, he added.
Members of the Organization of the Petroleum Exporting Countries (OPEC) reported supporting prices. This includes oil powers like Russia and countries in the OPEC+ group that pumped above supply targets from May to July.
They will need to slash output by over a million barrels per day for two months to compensate.
This week, the U.S. oil and natural rig count increased, acting as a check on further price gains. That was for the first time since March, with energy firms adding the most oil rigs they have in seven months.
Commodity news reports shale producers have also started drilling again.
