Oil Gains Ground As Tropical Storm Zeta Forces Evacuation Of Offshore PlatformsOil is trying to settle above the $39 level.
Oil Video 27.10.20.
Another Storm Provides Support To Oil Prices
Oil is rebounding after yesterday’s sell-off as Tropical Storm Zeta forced evacuations of offshore production platforms in the U.S. Gulf of Mexico.
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This hurricane season is very busy. The latest EIA Weekly Petroleum Status Report indicated that hurricane-related shutdowns have put significant pressure on U.S. oil production and pushed it to 9.9 million barrels per day (bpd).
The additional support from Tropical Storm Zeta comes at a time when the market is worried about the impact of the second wave of coronavirus.
The latest Baker Hughes Rig Count report showed that the number of U.S. oil rigs continued to increase which will lead to increased production levels in the future.
However, the disruption from Tropical Storm Zeta will put pressure on domestic oil production and keep the total production levels way below the recent 11 million bpd in the near term.
BP Says That Oil Demand Continues To Recover
BP has recently reported its third-quarter results, beating analyst estimates on earnings and missing them on revenue. In its comments, the company stated that the gradual recovery of oil demand continued, led by strong demand from Asia. This is not surprising since Asian countries have enjoyed success in containing the virus.
Nevertheless, the company’s CEO stated that the second wave of the virus hit the demand harder than expected.
At this point, the size of the blow dealt to oil demand by the second wave of coronavirus is one of the biggest questions for oil traders.
Despite the challenging situation on the virus front, most countries have avoided full lockdowns which put great pressure on demand for oil. However, even limited virus containment measures hurt weakened businesses and consumers so it’s hard to expect that they would last long.
In case the upcoming inventory reports do not show a dramatic increase in inventory levels, oil prices will have a chance to rebound as traders could start to bet that the second wave of the virus would not deal big damage to oil demand.
For a look at all of today’s economic events, check out our economic calendar.