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Page added on September 4, 2018
Oil climbs above $70 as storm threatens in Gulf of Mexico
Oil traded above $70 a barrel in New York as Tropical Storm Gordon approached offshore oil fields along the U.S. Gulf Coast.
Futures rose as much as 1.9 percent from Friday, skipping Monday because of the U.S. Labor Day holiday. Anadarko Petroleum Corp. evacuated two Gulf of Mexico platforms as Gordon neared the mouth of the Mississippi River. The risk of impact pushed up prices despite data showing rising OPEC output.
A hurricane warning has been posted for the Gulf Coast from eastern Louisiana to the Florida-Alabama state line, raising concerns that oil supplies may be disrupted. The region produces about 17 percent of U.S. crude, according to the Energy Information Administration, while onshore plants account for about 45 percent of U.S. refining capacity.
“The U.S. hurricane season has been very quiet so far, but as we approach the annual peak it may attract increased attention and, with that, some underlying support for crude oil,” said Ole Sloth Hansen, head of commodity strategy at Saxo Bank A/S.
West Texas Intermediate for October delivery rose as much as $1.31 to $71.11 a barrel on the New York Mercantile Exchange, and was at $71.07 as of 10:05 a.m. London time. Monday trades will be booked Tuesday because of the U.S. holiday. Average volume traded Tuesday was more than double the 100-day average.
Brent for November settlement advanced 97 cents to $79.12 a barrel on the ICE Futures Europe exchange, after climbing 51 cents on Monday. The global benchmark crude traded at an $8.47 premium to WTI for the same month.
Iran Sanctions
Oil has rebounded about 10 percent from the lows of August as buyers of Iranian crude start to shun shipments from the Persian Gulf nation even before renewed U.S. sanctions take full effect in November. India is said to be mulling a 50 percent cut in purchases, while shipments to South Korea plunged 40 percent in July and Europe’s imports have dropped by 45 percent since May.
“As sanctions directly targeting Iranian oil will be imposed on Nov. 4, increasing worries of disruptions to global crude supply are allegedly affecting the crude price as well,” Global Risk Management wrote in a research note.
Traders are closely watching the Organization of Petroleum Exporting Countries to see whether the group and its allies will be able to fill any potential deficit. OPEC produced 32.74 million barrels a day last month, an increase of 420,000 a day from July, according to a Bloomberg News survey of analysts, oil companies and ship-tracking data.
7 Comments on "Oil climbs above $70 as storm threatens in Gulf of Mexico"
Anonymous on Tue, 4th Sep 2018 10:33 am
The most recent EIA 914 (best data on the US), shows US oil production has grown exactly 1.6 million bopd in last year (JUN18 versus JUN17): 10.674 versus 9.064 million bopd.
https://www.eia.gov/petroleum/production/
Clicking on the spreadsheet for API gravity shows that 90% of US oil is below 50 gravity and 80% is below 45. (And that is conservative as it is lower 48 oil only…about a half million bopd of ~28 API Alaskan crude is left out.)
Looking at lower 48 natural gas (AK excluded as it is just reinjected), we see total withdrawals moved from 81.1 BCFpd to 90.8 BCFpd. That is an increase of almost 10 BCFpd in a year and over 10% in a year.
The US has become a solid natgas exporter with additional LNG trains coming on line as well as increased pipe exports to Mexico. Last month was already at 2 BCFpd net exports of dry gas. Note, gas growth and export happening with Henry Hub prices below $3.
In terms of NGLs, we are net exporters of about 1.5 million bpd (oil equivalent) or about 9 BCFpd (gas equivalent).
Duncan Idaho on Tue, 4th Sep 2018 11:09 am
The US is a oil importer (and probably always will be).
We use more than we have.
“The whole US inventory thing is interesting. There is a lot of supply available for the US, but that means the imports need to be high. The exports can’t be too low either. The refineries can only take a limited amount of extra light oil/condensate (about 30% max of 40-45 api oil) to keep the output of the types of products they want and also they want to avoid further investments to be able to process more of it if not profitable. And the result of it all – a high spread Brent/WTI because the rest of the world is suffering from lack of oil compared to demand. And forcing oil to be priced according to a global market in the end anyway.”
rockman on Tue, 4th Sep 2018 1:17 pm
“The refineries can only take a limited amount of extra light oil/condensate (about 30% max of 40-45 api oil) to keep the output of the types of products they want and also they want to avoid further investments to be able to process more of it if not profitable.”
US refineries don’t buy/process light oil/condensate. US refineries don’t buy heavy oil. For many decades US refineries have only processed BLENDED OIL according to the EIA statistics. The BLENDED OIL they process has been in a very narrow range around 32 API. The oil blending companies need every bbl of light oil condensate they buy in order to mix with heavy oils especially those imports.
Prior to the shale boom US companies had to import significant volumes of light oil/condensate for blending. Last year Venezuela had to import light oil/condensate half way around the world from north Africa to blend with its heavy oil. There is a significant global demand for light oil/condensate which is why it sells for a premium price compared to most other oil gravities.
print baby print on Tue, 4th Sep 2018 3:46 pm
Rockman , didnt you say that refineries can use light oil only . You tried to explain to me .
Anonymous on Tue, 4th Sep 2018 5:02 pm
US net imports of crude and products is down below 3 million bpd. from over 12 million in 2007.
https://www.eia.gov/dnav/pet/hist/LeafHandler.ashx?n=PET&s=MTTNTUS2&f=M
Add another couple million bopd production and another million bpd of NGLs and you are at neutral. Likely to happen by 2020, barring a price crash.
makati1 on Tue, 4th Sep 2018 7:09 pm
“Storm threats”, “War threats”, “Financial Threats”, “Trump Tweets”. … What is today’s rationale for the ups and downs of the oily price? THAT is why it is unimportant and not worth my time to read articles like this. Up today. Down tomorrow. LOL
IF oil is ‘plentiful’, as some here claim, how can a little storm affect the price? After all, any oil not sipped out of Louisiana ports/refineries (if any actually is) can be replaced from other sources easily. Right?
I’m glad I am NOT an oily investor or investor in any sort of market gambling. I sleep well at night and laugh at the idiots playing in the rigged market casino. I’m waiting for it to crash and wipe out all of the dreamers who want a ‘free lunch’ on the backs of those who actually work for a living. This month? Next? The “Ides of October” are coming.
Mark Ziegler on Wed, 5th Sep 2018 11:03 am
The EIA numbers never add up.
https://en.wikipedia.org/wiki/List_of_countries_by_oil_imports