FX.co ★ Hurricane Laura supports oil prices

In the Gulf of Mexico, oil output in the volume of about 1.56 million barrels per day has been suspended due to the threat of Hurricane Laura. It is about 84% of all production. Besides, 310 offshore facilities have been evacuated. Such a shutdown was last seen 15 years ago. Hurricane Laura is already being compared to Hurricane Katrina, which also halted about 90% of all oil production in 2005.

Weather reporters warn about a wind speed of 185 kilometers per hour. Hundreds of thousands of coastal residents will be evacuated.

This week, the hurricane may reach the Gulf Coast. In the meantime, oil prices are showing positive dynamics. However, this optimism will not last long. As soon as the danger of a hurricane disappears, production will rise again.

Experts noted that the hurricane could change the direction of energy flows. For example, part of the oil supplies from Europe to the United States can be redirected. This has already led to an increase in the price of oil premiums in Europe.

Moreover, China and the United States have managed to maintain relationships and continue to follow the terms of the trade deal. However, a new confrontation may still emerge.

According to the API, US oil inventories fell by 4.5 million barrels last week. Gasoline stocks fell by 6.4 million barrels, while distillate stocks, on the contrary, grew by 2.3 million barrels.

Brent crude futures for October rose by 0.33% to trade at $46.38 per barrel. WTI added 0.09% to settle at $43.38.

However, there is no point in hoping that this trend will last long. Most likely, prices will return to their previous range by the end of the week. Prices will also be affected by new statistics on oil reserves.

OANDA analyst Edward Moya argues that oil prices rose due to the hurricane. However, if the hurricane causes damage to the coasts of Texas and Louisiana, then demand will remain subdued for a long time.

Also, the coronavirus pandemic continues to weigh on oil quotes. It has already led to a serious disruption in the oil and gas market. As a result, it could change energy consumption patterns in developed countries.

Analysts believe that oil demand in the United States, China, and Southeast Asia will take a long time to recover. Moreover, many companies can reduce investments in new oil and gas projects, relying on alternative energy.

Moody's experts believe the OPEC + deal plays an important role in the market balance. Within two years, the countries will have to comply with the terms of the deal. Agency experts believe that oil prices will fluctuate in the range of $45-65 per barrel in 2021.