Oil prices fall for third day as Gulf Coast infrastructure recovers from Tropical Storm Beryl
Oil prices fell more than 1% on Tuesday in the third straight day of declines, as Gulf Coast production and refining infrastructure appears to have avoided substantial damage from Tropical Storm Beryl.
On Monday, Beryl made landfall in Matagorda, Texas, as a Category 1 hurricane but later weakened into a tropical storm. Beryl has moved inland and is now a post-tropical cyclone last due north of Shreveport, Louisiana, according to the National Hurricane Center.
“Brent crude prices ended their 4-week rally as the landing of hurricane Beryl resolved concerns about major production halts for now,” Goldman Sachs analyst Yulia Grigsby told clients in a Tuesday note.
Here are Tuesday’s closing energy prices:
- West Texas Intermediate August contract: $81.41 per barrel, down 92 cents, or 1.12%. Year to date, U.S. oil has gained 13.62%.
- Brent September contract: $84.66 per barrel, down $1.09, or 1.27%. Year to date, the global benchmark is ahead by 9.89%.
- RBOB Gasoline August contract: $2.52 per gallon, down 1 cent, or 0.41%. Year to date, gasoline is up 20.2%.
- Natural Gas August contract: $2.34 per thousand cubic feet, down 2 cents, or 0.93%. Year to date, gas is down 6.7%.
The port of Corpus Christi, a leading oil export terminal, has transitioned to post-storm recovery with no significant impact reported, according to a statement. But all terminals at the port of Houston will remain closed Tuesday to assess and repair damage, according to a social media statement.
Shell said late Monday that it is redeploying personnel to its Perdido platform in the Gulf of Mexico. The oil company had a shut-in production at the platform on Friday as Beryl barreled toward Texas.
The market’s reaction to the storm has been “curiously muted,” said John Evans, analyst at oil broker PVM. But Beryl may serve as a warning of what’s to come later in the season. Colorado State University has forecast an “extremely active Atlantic hurricane season” with 11 hurricanes expected, above the 1991 to 2020 average of 7.2 storms.
A severe hurricane season poses an upside risk for refining margins, with the backdrop tighter in refining than in crude markets, Grigsby told clients.
The market is also looking ahead to the release of U.S. crude oil inventory data on Wednesday. Traders have been hoping U.S. oil and gasoline inventories will fall in a sustained fashion, signaling an uptick in demand after summer fuel consumption got off to a soft start this summer.
U.S. oil inventories fell by 12.2 million barrels for the week ended June 28, and gasoline stocks declined by 2.2 million barrels in a potential bullish sign for the market.
Macquarie, however, is forecasting that oil inventories dropped by 1.2 million barrels last week, with the total balance “only modestly tighter than we had anticipated,” according to a Monday note.
