Crude Oil Rallies Above $70 as Another Hurricane Menaces Texas

Oil rose for a third day as another storm menaced a key U.S. energy hub just weeks after Hurricane Ida hammered local output.

Sheela Tobben

15 Sep 2021, 05:15 AM IST

Crude Oil Rallies Above $70 as Another Hurricane Menaces Texas

An employee displays a bottle of crude oil taken for testing. (Photographer: Heidi Wideroe/Bloomberg)

(Bloomberg) -- Oil rose after the regular trading session closed Tuesday when an industry group reported that weekly crude inventories and fuel inventories had decreased.

Futures in New York rose about 0.5% after the industry-funded American Petroleum Institute reported crude stockpiles fell 5.44 million barrels a day, while gasoline and diesel combined decreased by a similar volume, according to people familiar with the matter.

Earlier, oil settled little changed as investors tracked U.S. dollar movements and concerns faded around Hurricane Nicholas’ threat to crude supply in the U.S. Gulf of Mexico. Tropical Storm Nicholas didn’t impact offshore output in the Gulf of Mexico, storm-related power outages briefly shut the country’s largest gasoline pipeline that sends fuel from Houston to the Northeast.

U.S. crude futures have traded near $70 a barrel for most of this month. The International Energy Agency said on Tuesday that the world will have to wait until October for additional oil supplies as output losses from Hurricane Ida wipe out increases from OPEC+. Global oil demand has been falling since July as rising Covid-19 cases prompt mobility restrictions in Asia, according to the IEA.

Nicholas, which struck shore as a Category 1 hurricane and has since lost strength, had largely moved east from the Houston area by mid-morning local time, allowing refiners, chemical makers and other industrial concerns to assess the physical impacts of rain and wind.

The gasoline crack spread, a rough measure of the profit from refining crude into fuel, rallied about 3% on the temporary outage of Colonial Pipeline, the largest fuel conduit in the nation. The company’s diesel pipeline is still shut.

Prices:
West Texas Intermediate for October delivery added 32 cents to reach $70.77 a barrel at 4:59 p.m. in New York; it settled at $70.46 Brent for November settlement rose 38 cents to reach $73.89 a barrel; it settled at $73.60.

Meanwhile, China said it will make the first sale of oil from its strategic reserves on Sept. 24 after announcing the historic move last week. The initial auction will be for about 7.38 million barrels of crude, the National Food and Strategic Reserves Administration said in a statement Tuesday.

There are also signs of a stronger physical market, with Chinese companies buying grades from Brazil and Russia at higher premiums than a month earlier. The purchases come amid speculation that authorities are about to allocate more import quotas.

Other oil market news:
Iraq cut the price of its banner crude for U.S. customers sharply, a bold deviation from what Saudi Arabia chose to do with its own barrels just a few days ago. Extreme weather is also hitting Asia. All operations at China’s Zhoushan and Ningbo ports remained shut as of Tuesday morning after Typhoon Chanthu. The two locations are home to major refineries and oil-storage facilities. Russia’s crude oil and condensate output jumped in the first weeks of September as some of the nation’s key producers ramped up in line with the OPEC+ deal and Gazprom PJSC recovered from a fire at a facility in West Siberia.

Other oil market news:

Iraq cut the price of its banner crude for U.S. customers sharply, a bold deviation from what Saudi Arabia chose to do with its own barrels just a few days ago.
Extreme weather is also hitting Asia. All operations at China’s Zhoushan and Ningbo ports remained shut as of Tuesday morning after Typhoon Chanthu. The two locations are home to major refineries and oil-storage facilities.
Russia’s crude oil and condensate output jumped in the first weeks of September as some of the nation’s key producers ramped up in line with the OPEC+ deal and Gazprom PJSC recovered from a fire at a facility in West Siberia.