Oil futures settled little changed on Tuesday, holding ground at their highest prices in about six weeks, as concerns eased over the impact of Tropical Storm Nicholas on crude and natural-gas production in the Gulf of Mexico after the storm made landfall as a hurricane on the Texas coast.
The impact of Nicholas, which made landfall early Tuesday as a Category 1 hurricane, was “much less than previously anticipated as no major new refinery or oil production facility was shut off that wasn’t already offline,” said Manish Raj, chief financial officer at Velandera Energy Partners. Therefore, the market saw a “reversal of price increases that arose due to storm Nicholas.”
West Texas Intermediate crude for October delivery
rose by a penny to settle at $70.46 a barrel on the New York Mercantile Exchange. That was enough to mark its highest finish since Aug. 3, but prices had climbed to as high as $71.22 during the session, FactSet data show.
November Brent crude
the global benchmark, climbed by 9 cents, or 0.1%, at $73.60 a barrel on ICE Futures Europe, the highest front-month finish since July 30.
Nicholas, which has is now a tropical storm, brought more than a foot of rainfall to the same area hammered by Hurricane Harvey in 2017 and is dumping more water on storm-battered Louisiana. Hurricane Ida made landfall on the Louisiana coast on Aug. 29.
The Bureau of Safety and Environmental Enforcement late Tuesday estimated that 39.57% of oil production in the Gulf of Mexico remained shut in due to Ida, equivalent to 720,217 barrels a day of output. More than 48% of natural-gas output was also shut in.
Meanwhile, the International Energy Agency on Tuesday cut its supply rebound forecast for 2021 by 150,000 barrels a day, due in part to storm damage, while also cutting its demand forecast by 100,000 barrels a day, citing the impact of the delta variant of COVID-19.
The monthly report from the Paris-based agency comes after the Organization of the Petroleum Exporting Countries on Monday also trimmed its demand forecast for the third quarter of this year. Unlike OPEC, however, the IEA didn’t lift its 2022 demand forecast. OPEC said a robust economic recovery would see demand grow by 4.2 million barrels a day in 2022, up 900,000 barrels from the cartel’s August estimate.
The IEA expects world oil demand next year to average 99.4 million barrels a day, while OPEC is looking for demand of 100.8 million barrels a day.
October natural gas
settled at $5.26 per million British thermal units, up nearly 0.6%. Prices saw their fourth gain in five sessions, and again settled at the highest since February 2014.
The Energy Information Administration will release weekly data on U.S. petroleum supplies on Wednesday. The American Petroleum Institute will issue its own report late Tuesday.
On average, analysts expect the EIA to report a fall of 3.5 million barrels for domestic crude supplies in the week ended Sept. 10, according to a survey conducted by S&P Global Platts. They also forecast inventory declines of 2.2 million barrels for gasoline and 2 million barrels for distillates.