Crude oil futures were higher in mid-morning trade in Asia Aug. 30 after Hurricane Ida forced the shutdown of more than 95% of the Gulf of Mexico’s oil production and the US dollar softened on latest indications from the US Federal Reserve.
At 10:25 am Singapore time (0225 GMT), the ICE October Brent futures contract was up 35 cents/b (0.48%) from the previous close at $73.05/b, while the NYMEX October light sweet crude contract was 3 cents/b (0.06%) higher at $68.77/b.
“Oil prices were trading higher with Hurricane Ida driving evacuation from offshore rigs and putting a cap on oil supplies in the near term,” IG market strategist Yeap Jun Rong said Aug. 30.
Ida was upgraded to a Category 4 hurricane by the US National Hurricane Center on Aug. 29 with maximum sustained winds of 150 mph before making landfall south of New Orleans just before noon CT as one of the most powerful storms to ever hit the US Gulf Coast. By 4 pm CT, Ida remained at Category 4 strength, with sustained winds at 130 mph.
The US Bureau of Safety and Environmental Enforcement Aug. 29 reported that 95.65% or 1.741 million b/d of the US Gulf’s crude oil was shut in, as well as 93.75% or 2.091 Bcf/d of the region’s 2.2 Bcf/d of natural gas production. An estimated 288 offshore platforms were evacuated — 51.4% of the US Gulf’s total.
The US dollar has also weakened since Federal Reserve Chairman Jerome Powell at the recent Jackson Hole Symposium said the central bank may begin tapering its bond-buying program before year-end. The market had largely expected Powell to announce the start of the tapering program in September, and the unexpectedly dovish stance weighed heavily on the dollar.
Amid the upswing in oil prices, market watchers remained cautious ahead of the OPEC+ alliance meeting scheduled for Sept. 1.
However, ING analysts said in a note: “We do not foresee any fireworks from the group following the more recent recovery in prices and we expect that they will continue the easing of their supply cuts as planned.”