Phil Flynn is writer of The Energy Report, a daily market commentary discussing oil, the Middle East, American government, economics, and their effects on the world's energies markets, as well as other commodity markets. Contact Mr. Flynn at (888) 264-5665
The oil market is on the mend and may have finally found its seasonal bottom. Stimulus hopes, a healing President Trump, and storm fears are giving the oil a risk-on rally.
President Trump is signaling that he wants to get something done on Covid 10 relief, and both parties have a lot to lose if it does not happen. Reports that President Trump may be released from the hospital is easing fears of what might have happened if the President became severely ill. Now both parties are talking about stimulus, raising the odds that a deal will get done. Oil is also getting a boost from Mother Nature, and more tropical storm activity is threatening to shut down the Gulf Of Mexico oil production.
Bloomberg News reports tropical Storm Gamma is sliding southwest along the coast of Mexico’s Yucatan Peninsula bringing flooding rains and potential for mudslides across the region that a second system gathering strength south of Jamaica may threaten Gulf energy production and Louisiana as a Category 2 hurricane later this week even as Tropical Storm Gamma skirts the northern coast of Mexico’s Yucatan Peninsula.
Bloomberg News reports a second system gathering strength south of Jamaica may threaten Gulf energy production and Louisiana as a Category 2 hurricane later this week, even as Tropical Storm Gamma skirts the northern coast of Mexico’s Yucatan Peninsula. The storm, which will be named Delta as it strengthens, could pose a threat to offshore oil and natural gas production in the Gulf of Mexico and perhaps could end up striking Louisiana if its track holds, said Jim Rouiller, lead meteorologist with the Energy Weather Group. It was south of Jamaica late Sunday, where it has sparked storm warnings on the Cayman Islands and a hurricane watch in Cuba, the U.S. National Hurricane Center said. “This storm could explode over the Gulf and present a growing, perhaps serious, late-season threat to Gulf energy production,” Rouiller said. “On-shore refineries to shipping along with rigs and platforms across the upper Gulf region from Louisiana to Florida need to watch this one.”
U.S. oil producers are trying to come back. Reuters reports that U.S. oil rigs rose +6 last week to 189 and have now risen +17 from their cyclical low of 172 in mid-Aug, as oil producers respond to the earlier rise in prices from their lows.
Oil is also getting support from OPEC cur production from the UAE. Argus Media reports that, “The UAE cut its Sep crude oil output by 214,000 b/d to an average of 2.48mn b/d, having over-produced against its Aug Opec+ commitments.” Yet S&P Global Platts reports that Iraq’s oil exports went up 1.3% higher in Sept amid higher Kurdish output.
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