Hurricane Ida devastated power generation on the U.S. Gulf Coast, evacuating more than half of the rigs in the Gulf of Mexico, according to the Bureau of Safety and Environmental Enforcement (BSEE).
Investors have signaled that the blackouts could push up oil prices in the United States in the coming weeks, as the ability to turn crude oil into major byproducts will be severely constrained by the aftermath of the hurricane, which has qualified as a Category 4 storm before being downgraded to a Tropical Storm. .
Oil prices in the United States rose more than 3% as investors tried to determine how long it would take to get major oil refineries back up and running.
The region accounts for 17 percent of US crude oil production and 5 percent of its natural gas, according to figures from the US Energy Information Administration.
Most importantly, it is responsible for refining 45 percent of US oil and processing 51 percent of the country’s natural gas.
The hurricane, which was declared a major disaster by the US president, left more than a million people without energy in Louisiana while nearly 100,000 others face blackouts in Mississippi.
But it is still too early to determine whether or not Ida’s impact will be as severe as Hurricane Katrina that hit the region 16 years ago.
BSEE and industry estimates suggested Sunday that more than 90 percent of gas and oil production in the Gulf of Mexico has been halted.
And a sense of uncertainty among commodity investors was underscored by the early divergence in oil and refined commodity prices on Monday after major oil benchmarks climbed 10% last week, before the landing. Ida.
While crude oil prices are often correlated, a gap between the amount of oil extracted and the ability to turn it into an oil by-product can temporarily alter this relationship as investors attempt to understand the long-term impacts of a hurricane.
U.S. gasoline and heating futures rose Monday, but U.S. crude oil prices faltered before the U.S. market opened, while Brent crude, a global oil benchmark, fell .
There are also other factors at play.
The OPEC cartel of oil producers is expected to agree to increase oil supply on Wednesday, thus restraining price increases. Meanwhile, Jerome Powell, head of the US Federal Reserve, has avoided saying – as some investors had feared – that the central bank’s efforts to support the economy by buying bonds would be curtailed imminently.
Instead, at last week’s Jackson Hole Symposium, he noted that positive economic signals must be opposed to “the further spread of the Delta variant,” indicating that reduction efforts may come later. This year.
And while the rise in oil prices before Ida landed is “nothing new,” according to Craig Erlam, senior market analyst at the Oanda exchange firm, “every hurricane is different and brings success. uncertainty for the region which strongly contributes to American production ”.
More about this article: Read More
This notice was published: 2021-08-30 14:15:59