Oil prices rise in Irma’s wake
Oil prices hit a new high recently in the wake of Hurricane Irma, as investors assessed the likely energy demand in affected areas and took in the extent of the damage to refineries on the Gulf Coast after Hurricane Harvey had passed through.
How Irma Affected Oil Prices
Commodities exchange prices were affected widely by the hurricanes’ mutual effect with October West Texas Intermediate crude up 1.2% to $48.07 a barrel on the New York Mercantile. Meanwhile, on the ICE Futures Europe, November Brent was up 0.1% to $53.84 a barrel. While the current conditions in affected areas are assessed, oil is likely to remain volatile, especially given that two further hurricanes are predicted to make landfall in the next few weeks.
Goldman Sachs analysts have predicted that Irma’s effect on prices will actually be considerably smaller in the long term than that of Harvey. The reasoning behind this is that Texas has double the oil consumption of Florida and the high concentration of petrochemical refining on the US Gulf coast.
Other Price Fluctuations Expected
Saudi Arabia, globally the largest exporter of crude and the largest member of the OPEC community, stated that they and Venezuela were in discussion regarding an extension of OPEC’s oil output cut deal to beyond March 2018’s expiry date. JBC Energy consultancy analysts are of the opinion that these talks will provide support for crude prices.
The announcement comes following OPEC’s agreement last year to cap production at around 1.8 million barrels a day, the goal being to relieve a worldwide oversupply that has depressed prices. Investors and traders were also anticipating monthly reports from OPEC and the IEA, which will contain their production data and forecasts for global demand. A report detailing short-term energy outlook figures is also expected shortly from the US Energy Information Administration.
As winter approaches in many parts of the world and the rebuild operation begins in the Caribbean, investors and traders will be well-advised to keep a close watching brief on how oil prices react over the coming weeks and months.
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