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Oil steady as huge Gulf of Mexico storm shuts down production

Published 08/27/2020, 08:34 AM
Updated 08/27/2020, 08:40 AM
© Reuters.
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MELBOURNE, Aug 27 (Reuters) - Oil prices were mixed in early
trade on Thursday even as oil rigs and refineries shut ahead of
a massive storm in the Gulf of Mexico racing towards Texas and
Louisiana, with slim worries about the impact on supply as oil
stockpiles remain high.
U.S. West Texas Intermediate (WTI) crude CLc1 futures fell
5 cents, or 0.1%, to $43.34 a barrel at 0014 GMT, reversing a 4
cent gain on Wednesday.
Brent crude LCOc1 futures inched up 2 cents to $45.66 a
barrel after falling 22 cents, or 0.5%, on Wednesday.
The hurricane threat has affected the market much less than
usual, as oil and product inventories remain high due to the
coronavirus pandemic's hit to fuel demand, and uncertainty over
the pace of the global recovery clouds the outlook.
"The continued rise in the number of COVID-19 cases in
Europe and Asia remains a concern for investors, despite several
European nations saying they won't reinstate lockdowns," ANZ
analysts said in a note.
U.S. crude inventories stood at 507.8 million barrels at the
end of the week to Aug. 21, even after a larger-than-expected
drop of 4.7 million barrels. Hurricane Laura intensified on Wednesday and is now forecast
to bring heavy rains and catastrophic, 150 mile-per-hour (240
kph) winds that will drive ocean waters up to 40 miles (64 km)
inland, the U.S. National Hurricane Center said. Landfall is expected at about midnight (0500 GMT Thursday).
Oil producers on Tuesday shut 1.56 million barrels per day
of crude output, or 84% of the Gulf of Mexico's production,
evacuating 310 offshore facilities. Nine refineries that convert nearly 2.9 million barrels per
day of oil into fuel, or about 15% of U.S. processing capacity,
were shutting down.

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