Oil held near US$75 a barrel as Hurricane Michael threatened supply in the U.S. just as the nation’s stockpiles were forecast to increase.
Futures in New York were little changed after rising to a week’s high on Tuesday. Hurricane Michael has curtailed production in the Gulf of Mexico by 40 per cent as it rushes toward Florida as a “dangerous” storm. U.S. crude inventories probably rose for a third week, according to a Bloomberg survey.
“Hurricane Michael is the top concern for the oil market this week,” said Jens Naervig Pedersen, senior analyst at Danske Bank A/S in Copenhagen.
Crude has climbed about 15 per cent since mid-August on supply concerns, prompting the International Energy Agency to urge producers to pump more as the market is “entering the red zone.” While prices have eased from near a four-year high, U.S. President Donald Trump renewed his attack on OPEC on Tuesday, saying “ I don’t like US$74.”
West Texas Intermediate for November delivery was at US$75 a barrel on the New York Mercantile Exchange at 10:52 a.m. in London, up 4 cents, after rising 67 cents on Tuesday. Total volume traded was about 22 per cent below the 100-day average.
Brent for December settlement was 7 cents higher at US$85.07 a barrel on the London-based ICE Futures Europe exchange, after rising US$1.09 on Tuesday. The global benchmark crude traded at a US$10.17 premium to WTI for the same month.
Michael’s winds rose to Category 4 strength of 130 miles an hour and it’s set to make landfall in Florida Wednesday. Damages from the hurricane could reach as much as US$15 billion, depending on its intensity after landfall and how quickly it moves through the region, analysts said.
“The market is awaiting different set of news including Michael’s impact, and U.S. crude inventory data,” said Giovanni Staunovo, an analyst at UBS Group AG.Other oil-market news: American crude inventories probably rose by 2.8 million barrels last week, according to a Bloomberg survey of analysts. Stockpiles in Cushing, Oklahoma, also increased by 800,000 barrels in the same period, according to a forecast compiled by Bloomberg. Saudi Aramco will supply about 4 million barrels of additional crude to Indian customers for November, according to a person familiar with the matter. That’s on top of their monthly contractual supplies from Aramco. “Emotional” tweets by Trump lead to excessive increases in crude prices, Russia’s Energy Minister Alexander Novak said in an interview with the Russia 24 TV channel. BP Plc boss Bob Dudley agreed on Wednesday the oil market is emotionally unstable, and didn’t expect US$85 a barrel Brent prices to stay. Cracking down on fossil fuels could actually boost profits for the world’s biggest oil companies, though the industry must shift toward cleaner fuels or be left behind by investors, according to Goldman Sachs Group Inc.