Oil futures moved modestly higher Wednesday after Hurricane Ian forced temporary production cuts in the Gulf of Mexico.
Price action
-
West Texas Intermediate crude for November delivery
CL.1,
+0.60% CLX22,
+0.60%
was up 30 cents, or 0.4%, at $78.80 a barrel on the New York Mercantile Exchange. -
November Brent crude
BRNX22,
+0.24% ,
the global benchmark, was up 13 cents, or 0.2%, at $86.40 a barrel on ICE Futures Europe. December Brent
BRN00,
+0.47% BRNZ22,
+0.47% ,
the most actively traded contract, rose 33 cents, or 0.4%, to $85.20 a barrel. -
Back on Nymex, October gasoline
RBV22,
+0.58%
rose 0.4% to $2.503 a gallon, while October heating oil
HOV22,
+1.48%
rose 1.6% to $3.312 a gallon. -
October natural gas
NGV22,
-1.62%
fell 1.3% to $6.673 per million British thermal units.
Market drivers
Hurricane Ian strengthened rapidly into a Category 4 storm that was expected to make landfall on Florida’s Gulf Coast Wednesday. The Bureau of Safety and Environmental Enforcement reported Tuesday that in response to the storm, 11% of oil production, and 8.56% of natural-gas production, in the Gulf had been shut in.
Analysts said the impact on oil prices was likely to be short-lived.
Oil slumped to eight-month lows earlier this week. A persistently strong U.S. dollar, with the currency index
DXY,
trading at a 20-year high, has been a weight on crude and other commodities priced in the unit, making them more expensive to users of other currencies.
Bullish analysts, however, have argued that supplies remain tight and that prices could rebound on significant supply concerns. Attention is turning toward next week’s meeting of the Organization of the Petroleum Exporting Countries and its allies, which earlier this month.
“We have to acknowledge the dominant trend is still lower for the oil market right now but we do continue to look for the market to stabilize soon as we do not believe the combination of overcompliance by OPEC+, tight global physical markets, and the geopolitical uncertainty surrounding the war in Ukraine can be solely offset by concerns about the global economy,” wrote analysts at Sevens Report Research, in a note.
European and UK benchmark natural-gas prices jumped after Kremlin-run Gazprom warned that the remaining gas route to Europe, via Ukraine, is now at risk of being shut off. Benchmark Dutch front-month futures soared 12% to €209 per megawatt hour on Tuesday morning, up from €180 per megawatt hour the day before. U.K. gas futures
GWMV22,
for October were up 23% to £315 per megawatt hour.
U.S. supply data will be in focus. The American Petroleum Institute late Tuesday said U.S. crude inventories rose by 4.2 million barrels last week, while gasoline stocks fell by 1 million barrels and distillate supplies, which include diesel and heating oil, rose by 438,000 barrels, according to reports.
Official data from the Energy Information Administration is due Wednesday morning. Analysts surveyed by The Wall Street Journal, on average, look for crude inventories to fall by 300,000 barrels, while gasoline stocks are seen up 900,000 barrels and distillates down 100,000 barrels.
