Oil prices slid on Tuesday between worries that power outages and flooding in Louisiana following Hurricane Ida will lower crude demand from refineries while global producers intend to raise production.
Lower manufacturing data from China also pulled down the prices, where factory activity expanded slower in August associated with the previous month.
U.S. West Texas Intermediate (WTI) crude futures were under 9 cents, or 0.13%, at $69.12 per barrel as of 0640 GMT, turning some of Monday’s earnings.
Because of expiring on Tuesday, Brent crude futures for October dropped 8 cents, or 0.11%, to $73.33 per barrel, following gaining almost 1% on Monday. The more intense November contract was under 9 cents, or 0.12%, at $72.14 a barrel.
According to Ravindra Rao, vice president, commodities at Kotak Securities, the oil market is in a wait-and-mark mode as both demand-supply consequences of Hurricane Ida are assessed.
Market players are on the sidelines before the OPEC+ review conference tomorrow.
Hurricane Ida beat out at least 94% of the offshore Gulf of Mexico oil and gas generation and created “catastrophic” damage to Louisiana’s grid.
Utility officials stated the lack of power could endure three weeks, slowing efforts to repair and restart energy facilities, which could take at least two weeks to resume operations fully.
RBC analysts said in a note that with companies currently evaluating damages, an overall timeline for how long-shuttered capacity will be down is still unknown.
With “catastrophic” injury to the grid in Louisiana, power blackouts could last three weeks, utility officials stated, which would impede efforts to restore and restart energy facilities.
On the supply front, about 1.72 million bpd of oil production and 2.01 million cubic feet per day of natural gas production remained offline in the U.S. surface of the Gulf of Mexico following evacuations at 288 platforms.
OPEC+ meeting awaited
Additionally, having a lid on oil prices is possible that the Organization of the Petroleum Exporting Countries (OPEC) and partners, together with recognized as OPEC+, will agree to add another 400,000 bpd of supply each month throughout December.
According to Jeffrey Halley, senior market analyst at OANDA, brent crude among $70 and $75 per barrel appears to be the grouping’s sweet spot. With the futures curve in backwardation, demand continues robust, notwithstanding the short-term noise.
OPEC+ will attend on Wednesday. Delegates state they assume the production expansion to go forward. Nevertheless, on Sunday, Kuwait’s oil minister said that the plan could be reviewed amid worries about raging coronavirus infections in Asia, restricting fuel demand.