The oil market has a demand problem - Houston Chronicle

Storms in the Gulf of Mexico could support crude oil prices this week, but the longer term outlook suggests weakening demand and lower prices,  analysts said.
 
The Atlantic is busy with storms, but it’s the Gulf of Mexico that matters. Tropical Storm Sally is expected to turn into a hurricane before it reaches the southern coast of Louisiana later today or early Tuesday. The National Hurricane Center expects life-threatening storm surge and possibly a foot of rain along the southern Mississippi River delta.
 
BP already took precautionary measures by evacuating non-essential personnel from its Nakika and Thunderhorse platforms in the US Gulf. In late August, more than 80 percent of total US Gulf oil production and some 60 percent of gas production was idled because of Hurricane Laura, which quickly weakened after making landfall as the strongest hurricane to hit Louisiana since 1851.
 
Since Laura, the price for Brent crude oil has drifted lower, from $45 per barrel to around $39.77 per barrel in early Monday trading.

RELATED: Crude inventories grow as economic recovery loses momentum
 
Phil Flynn, a market analyst at The Price Futures Group in Chicago, expects Brent to be stuck in the $40 range as the end of the summer travel season in the United States limits demand.
 
“We also have more storm activity that will mess up data for a while as well,” he said. If stock markets rally,  however, it could support oil prices as well if traders view it as a sign of an improving economy.

But the recent strength in stock markets, particularly the tech-heavy Nasdaq, Composite, makes the U.S. economy look better than data suggest. Nearly 1 million Americans a week are filing first time claims for unemployment benefits and the pace of the recovery has slowed in recent months.

Oil markets have also received support from a drain on gasoline levels in the United States, which hinted at relatively healthy demand.  But that could be fleeting as driving wanes with the end of summer.
 
The committee monitoring compliance with output cuts by the members of OPEC+  meets this week. Sticking to those productions cuts will be a factor for oil markets, but the outlook for demand will be the main driver for oil markets.

“The fact remains that in the face of weak demand and a global economy still in the grips of a serious recession, there is little the group can do to lift oil prices,” said Ellen R. Wald, president at Transversal Consulting in Florida.

RELATED: BP enters offshore wind market in latest move away from oil and gas

The long term doesn't look much brighter, if  the British oil major  BP is accurate in its forecast on the energy transition. In its latest assessment, BP expects the share of fossil fuels as a component of total energy demand falls from 85 percent to as low as 20 percent by 2050.
 
With OPEC+ influence waning on the market, demand suppressed by the pandemic and a lack of federal stimulus for the US economy, it looks like oil prices have little support. Traders will look carefully at the details of monthly reports from the International Energy Agency and OPEC this week, but don’t expect big changes in the outlook, said Jamie Webster, the senior director at the Boston Consulting Group’s center for energy impact.
 
“There’s lots of bearish sentiment,” he added.

Daniel J. Graeber is a veteran energy correspondent and founder of The GERM Report, a survey of the intersection between energy and foreign affairs.

Let's block ads! (Why?)

"oil" - Google News
September 14, 2020 at 07:04PM
https://ift.tt/3bWvfql

The oil market has a demand problem - Houston Chronicle
"oil" - Google News
https://ift.tt/2PqPpxF
Shoes Man Tutorial
Pos News Update
Meme Update
Korean Entertainment News
Japan News Update

Bagikan Berita Ini