Oil prices near five-month high as producers brace for hurricane – business live | Business

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North American oil prices have sustained five-month-high levels as producers brace for hurricanes that could prompt the biggest weather-related shutdown for 15 years – as well as fears for the potential human costs.

Futures prices for West Texas Intermediate, the North American benchmark, hit highs of $43.57 per barrel on Tuesday, and have just about sustained those levels at about $43.27 at the time of writing. Before this week prices had not reached that level since the coronavirus pandemic triggered the price crash in March, followed by the historic negative prices in April.

Brent crude futures, the North Sea benchmark, traded as high as $46.10 per barrel on Wednesday, just shy of a five-month high.

Crude oil production has fallen to levels last seen during 2005’s Hurricane Katrina as producers brace for Hurricane Laura, and officials along the Texas and Louisiana coasts have ordered residents to move inland. Winds reaching 115 miles per hour are forecast.

Reuters reported that oil producers on Tuesday had evacuated 310 offshore facilities and shut 1.56 million barrels per day (bpd) of crude output, 84% of Gulf of Mexico’s offshore production, near the 90% outage that Katrina brought 15 years ago.

Analysts at Deutsche Bank led by Jim Reid wrote:


The incoming arrival of Hurricane Laura to the United States [has] led to worries over potential fuel shortages.

The National Hurricane Center warned that Laura would reach the northwestern Gulf Coast tonight, with the danger of life-threatening storm surges. Much of the oil production in the area has already been shut down, and there are obvious concerns of further damage to come.

This map of the area from S&P Global’s Platts shows just how much US oil capacity is concentrated in the Gulf of Mexico – and also the number of refineries which will not have any oil to process:

Platts Oil
(@PlattsOil)

The US Gulf Coast energy industry was preparing Aug. 25 as the second of two storms this week was approaching the Texas/Louisiana coast | #crudeoil #natgas #Laura #hurricane#FACTBOX: https://t.co/dmJd3MIZYu pic.twitter.com/b5ChRd55U4


August 25, 2020

Satellite pictures of the ocean tell their own story:

Reuters
(@Reuters)

Laura swirls toward U.S. Gulf Coast as category 2 hurricane https://t.co/hfgbNWz1qZ pic.twitter.com/Pva0MVG5jT


August 26, 2020

Elsewhere on Wednesday, investors are mainly looking ahead to the Jackson Hole central bankers’ summit (albeit carried out this year by videoconference for obvious reasons).

Bonds sold off overnight as investors look for riskier assets, although the traditional rotation of money into stock markets does not appear to have materialised this morning. Asian markets retreated despite US equity indices hitting new record highs last night.

The FTSE 100 has lost 0.3% in early trading, while Germany’s Dax and France’s Cac 40 have lost 0.2% and 0.4% respectively.

The agenda

1:30pm BST: US durable goods orders, July (previous: up 7.3%; consensus: up 4.3%)

2pm BST: European Central Bank Isabel Schnabel speech

Source: The Guardian

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