Tropical Storm Nicholas Takes Toll on Oil Prices
Tropical storm Nicholas’ looming threat over oil production and prices in the Gulf of Mexico is increasing as it makes its way into the region. On Tuesday, oil prices took a tick upwards, a six-week high.
The International Energy Agency has predicted rising demand for oil for the rest of the year, and markets have taken notice. West Texas Intermediate (WTI) crude is selling for a session high of US$74.28, while Brent crude did for US$74.06. Both mixes are trading at their highest since early August. Commerzbank said “the substantial production outages in the Gulf of Mexico remain one of the factors driving prices.”
“[it] means we will not see production come back on for months possibly. What that means is we are going to continue to see a tighter supply of both oil and natural gas [...], especially as we get into the higher demand months called winter,” said Phil Flynn, senior analyst at PRICE Future Group, regarding the US Bureau of Safety and Environment Enforcement’s estimation that only about 48 percent of production had returned to normal.
Nicholas is following Ida steps in threatening the livelihoods of millions in the southern US. Heavy rainfall and severe flooding are expected onshore in the following days. The Texas Gulf Coast’s refinery complex is bracing for the hit, as a myriad of oil producers, platforms, and companies continue to struggle with the aftermath of the over two-week old Hurricane Ida and its effects on production.
MBN has reported on the current situation of recovering efforts in the industry: so far, only about half of production is back online. Evacuation efforts started early on Monday and offshore platforms have not been excluded from them.
These numbers cast a dark shadow on output, nevertheless, oil producers have not confirmed that they are planning on the same levels of shutting down operations as they did with Ida.