Oil Rallies as Twin Hurricane Threat Disrupts U.S. Production
(Bloomberg) — Oil rose on Monday as a twin storm front threatened major disruption to oil operations in the Gulf of Mexico, while ongoing concerns over the economic impact from the pandemic kept gains in check.
Futures for October in New York rallied as much as 0.8%, after falling 1.1% on Friday. More than half of U.S. Gulf of Mexico production was shut down as of midday Sunday as the region prepared for two approaching hurricanes. The systems, Marco and Laura, are coming from different directions and have the potential to cause billions of dollars in damage.
The U.S. recorded less than 1,000 coronavirus deaths for the first time in five days, but flare ups around the world continue to hamper efforts to kickstart an economic recovery. Authorities across Europe are dealing with a resurgence of cases, while South Korea is considering new restrictions to combat a fresh outbreak there.
Drillers in the Permian Basin of West Texas and New Mexico are roaring back, putting an additional 10 rigs to work last week for the biggest jump in activity this year. But despite the jump, overall drilling is still mired at levels not seen since the early days of the shale boom more than a decade ago.
U.S. benchmark crude futures have risen for the past three weeks amid a steady decline in domestic crude and gasoline supplies, and tentative signs that demand is returning. Still, virus cases continue to surge around the world and cautionary signals are emerging over the state of a global economic recovery.
Libya’s National Oil Corp. said Friday that it welcomed the country’s new cease-fire agreement and the nation should be able to resume exports when all of its facilities are freed from military occupation, threatening to unleash supply at a time when the OPEC+ alliance is easing output curbs.
On a brighter note for demand, U.S. oil exports to China are set to reach a record next month in a sign that Beijing is stepping up purchases to meet its commitments under a landmark trade deal.
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