Supply disruption threats boost oil and gas

Highlights:

• ENERGY:
  Brent crude oil futures advanced by 1.9% or $1.36 at $72.43 a barrel.
  WTI crude oil futures soared by 2.3%, or $1.52, to $68.94 a barrel.
  Natural gas was trading with an advance of 0.62% at $4.23 per mmBtu in New York.
• METALS:
  October gold futures were trading with a gain of $3.80 at $1,796.80. September Comex silver added $0.085 at $23.635 an ounce.
  Copper three-month futures contract was selling at $9,315.50/t.
• AGRICULTURAL:
  December corn futures on the CBOT traded with a loss of 3-1/4 cents at $5.47-1/2 per bushel.
  Soybean futures for November dropped by 9-1/4 cents at $13.17 per bushel.

Uncertainty about the hurricane support the oil market

Worries about supply disruption supported oil prices on Friday. 

Brent crude futures advanced by 1.9% or $1.36 at $72.43 a barrel. 

WTI crude oil futures soared by 2.3%, or $1.52, to $68.94 a barrel.

Edward Moya, a senior market analyst at OANDA, stated that disruptions in output in the Gulf of Mexico support oil prices. On the other hand, OPEC+ might resist increasing output due to the Delta variant’s impact on the energy demand.

Supplies are likely to be interrupted at the Gulf of Mexico due to the presence of a possible hurricane. Energy companies have begun to evacuate personnel from their oil rigs and cancel production in the region. 

Consider that the Gulf of Mexico offshore oil fields account for 17% of the US crude production and 5% of dry natural gas production. In addition, more than 45% of the total refining capacity in the United States is located on the Gulf Coast.

Exxon Mobil Corp said it was preparing its 520,000 barrels per day refinery in Baton Rouge, Louisiana, for bad weather.

Phillps 66 spokesman Bernardo Fallas declared that operations at the Louisiana refineries would adjust based on the progression of the storm.

Traders don’t know about the size of the hurricane and how long it will take to arrive early on Friday. They need to know the details in order to assess the impact of potential rig damage and future demand. The final evolution of that meteorological pattern will also determine whether it is a short-term or long-term event.

Meanwhile, analysts say oil prices could rise throughout the session until traders clear up. However, prices could quickly drop if the hurricane avoids major production facilities.

Natural gas rose after the EIA data

Natural gas futures were trading higher on Friday, driven by the US government’s surprising storage report. On the other hand, the demand for LNG rebounded. Besides, hurricane fears have shaped the market. Following these factors, the commodity futures have soared to the highest level in recent months.

Natural gas was trading with an advance of 0.62% at $4.23 per mmBtu in New York.

The United States Energy Information Administration reported that national natural gas reserves increased by 29 Bcf during the week ending August 20. Analysts expected a larger increase of 37 Bcf.

Total inventories now stand at 2.851 trillion cubic feet. It is a decrease of 563 Bcf compared to the last year and a 189 Bcf drop compared to the five-year average.

Gold and silver gained slightly ahead of Powell’s speech

Gold and silver prices edged up modestly in the early Friday trading. 

At the time of writing, October gold futures were trading with a gain of $3.80 at $1,796.80. The first resistance level is seen at $1,800.00 and then at this week’s high of $1,809.80. The first support is observed at $1,791.70 and then at $1,779.20. 

Bank of America analysts estimate that the price of gold will rise to $1,900 an ounce towards the end of this year. Besides, it will average $1,800 in the fourth quarter, staying at that level during the first half of 2022.

September Comex silver added $0.085 at $23.635 an ounce. Prices are still in a three-month-old downtrend. The first resistance level is seen at $24.00 and then at $24.38. Next support is observed at $23.42 and then at $23.25.

Copper recovered from four-month lows

Copper recovered this week, and the three-month-old futures contract was selling at $9,315.50/t in yesterday’s LME official session. 

The red metal prices slipped by 6.6pc to $8,783.50/t on 19 August. It was the first time when copper dropped below $9,000/t in four months. Prices plunged after strengthening the US dollar. 

On the other hand, analysts believe that pick-up in the industrial metal demand contributed to the rise. 

Rains in the US weigh on corn and soybeans prices

Corn futures ended the day with slight falls. December corn futures on the CBOT traded with a loss of 3-1/4 cents at $5.47-1/2 per bushel. Rains in some regions of the North American Midwest put pressure on corn prices. However, some signs of greater export demand limit the falls. Corn prices are expected to waver between flat and bearish.

As for soybeans, rains in northern areas also boosted hopes for yield improvement. As a result, Soybean futures for November dropped by 9-1/4 cents at $13.17 per bushel.