Hurricane Florence, which is moving towards the U.S. East Coast, helped
push prices higher few days ago and will continue to act as a tailwind for West
Texas Intermediate until at least Thursday, based on the latest updates
from the National Hurricane Center.
Last week, tropical storm Gordon
shut in oil production amounting to 160,000 bpd for several days as it
passed through the Gulf of Mexico. That represented about one-tenth of
total oil production in the GOM.
Still, any hurricane approaching the U.S. coast will affect prices in
the current supervolatile state of the market, with demand concerns
adding to the already high geopolitical risk premium.
On the headwind side are the sanctions on Iran, which are scheduled
to enter into effect in early November and are already pulling oil
prices higher as market players continue to doubt that other producers’
capacity will be able to make up for all the lost supply from Iran.
On the other side, there are those who are worried
that demand for crude may be approaching a seasonal slowdown after the
end of summer driving season and the beginning of refinery maintenance
season.
Credit: Irina Slav
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