Oil Prices Register a Slight Decline as Hurricane Laura Moves Through
In the early trading hours in New York, there was a slight decrease in oil prices. This comes in the backdrop of news that Hurricane Laura would pass through the Louisiana and Texas states without causing any major destruction to pipelines and refineries in the region. It has come as a sigh of relief for the major oil-producing companies that were initially worried about the hurricane’s impact on the production and storage of crude oil in refineries in the hurricane region.
In terms of price, US crude futures were at $43.23/barrel, which translated into a decline of 0.3%. Brent contract, on the other hand, registered a decline of 0.6%, with prices pegging at $45.90/barrel. It is important to note that both benchmark indices reached their 5-month high overnight owing to the prediction of the shortage in the oil supply. RBOB Gasoline Future also registered a sharp decline of 4.1 % to $1.3044/gallon, which is the lowest value recorded in the last three days.
The decrease in the intensity of the Hurricane from category 4 to category 2 is a relief; however, things are not clear what kind of damage this storm had inflicted in this region. There is no confirmation from any major refinery operating in these places, and officials are tight-lipped, not divulging any detail whatsoever. Nonetheless, there is little to doubt that many proactive steps taken by both administration and companies have proved instrumental in minimizing the company’s losses.
According to S&P, refiners in the region had taken 2.36 million barrels/day of the refining capacity offline before the hurricane descended. In contrast, offshore producers shut 1.56 million barrels/day of production. There is not going to be any major disruption in the oil supply due to this storm as higher levels of stockpiles across the US usually come to the rescue in such situations. Also, it is quite easy to get the supply diverted from Europe to the east coast, which further eases the supply’s pressure. Amid this hurricane, the statement from the Russian President, Vladimir Putin, has also assumed significance. The president said that he would like to see crude prices a little higher, which means the country will continue to keep the supply of crude constrained in the market.