Advertisement
Advertisement

Hurricane Delta Effect Minimal on Oil Bears

By:
Olumide Adesina
Published: Oct 8, 2020, 07:08 UTC

The black liquid fossil prices drifted significantly higher at London’s pre-opening trading session on Thursday.

oil

The price stability is riding on bias coming from the Gulf of Mexico, as oil workers get evacuated from their oil rig platforms in anticipation of Hurricane Delta, though growing concern about fuel demand concerns fading chances for more upsides as the world’s biggest oil consumer recently announced a build in its crude oil stockpiles.

Both major oil benchmark, that includes Brent crude and West Texas Intermediate traded above $40/barrel at the time of writing, with Brent crude prices hovering near the $42.10/Barrel.

The abiotic macro is presently lingering around the Gulf of Mexico with a Category 3 ranking, oil traders are wary such hurricane storm could disrupt the prevailing production capacity of about 1.5 million barrels per day, and might partly be responsible why the prices of the two major crude benchmarks trade above their key critical support levels amid a build-in U.S crude oil inventories released yesterday.

That said, the price action suggests Brent crude would be range-bound between the $39.50 -$43.50 in the near term as, there seem to be no strong macro driver, capable of propelling Brent crude prices breakout from its prevailing range at least until news like the introduction of an approved COVID-19 vaccine hits the headline, as the deadly COVID-19 virus, had already caused more than a million causalities globally, disrupted economic activities at unprecedented levels and most importantly distorted the energy demand/supply rebalancing order globally.

I think at this point it seems fair, saying oil bears have a higher probability of hitting an home run as crude oil might start falling off again since the hurricane storm effect looks priced in the fragile energy market already

These sentiments are strengthened as demand-driven commodities metrics show incredible fragility and even more so for crude oil in an environ, that has high degree of geopolitical uncertainty.

For a look at all of today’s economic events, check out our economic calendar.

About the Author

Olumide Adesina is a France-born Nigerian. He is a Certified Investment Trader, with more than 15 years of working expertise in Investment trading. He is a Member of the Chartered Financial Analyst Society.

Did you find this article useful?

Advertisement