Oil Price Fundamental Daily Forecast – Hurricane Slams Major US Oil Port; OPEC+ May Curtail Production Hike

U.S. West Texas Intermediate and international-benchmark Brent crude oil futures closed higher on Friday as oil companies raced to evacuate employees from offshore infrastructure ahead of hurricane Ida, prompting shutdowns at their facilities in the Gulf.

By Sunday, energy companies had evacuated 288 platforms – more than half of those in the Gulf of Mexico and all 11 drilling rigs, according to the Bureau of Safety and Environmental Enforcement (BSEE).

On Friday, October WTI crude oil settled at $68.74, up $1.32 or +1.96% and November Brent crude oil finished at $71.70, up $1.52 or +2.12%.

OPEC+ Could Reconsider Output Increase, Says Kuwaiti Oil Minister

The increase in oil output agreed last month by OPEC+ nations could be reconsidered at its next meeting on September 1, Kuwait’s oil minister said on Sunday.

The Organization of the Petroleum Exporting Countries (OPEC) and allies including Russia, collectively known as OPEC+, will meet on Wednesday to discuss the previously agreed increase of 400,000 barrels per day (bpd) for the next several months, Reuters reported.

“The markets are slowing. Since COVID-19 has begun its fourth wave in some areas, we must be careful and reconsider this increase. There may be a halt to the 400,000 (bpd) increase,” Mohammad Abdulatif al-Fares told Reuters on the sidelines of a government-sponsored event in Kuwait City.

Economies of East Asian countries and China remain affected by COVID-19 and caution must be exercised, Fares added.

Earlier in the month, the Whitehouse urged OPEC+ to boost oil output to tackle rising gasoline prices that it views as a threat to the global economic recovery.

Asked about the U.S. call, Fares said OPEC+ members had different views on the matter.

“There are meetings with OPEC countries, especially the Gulf Cooperation Council countries, and so far there are different views on how to handle this issue,” Fares said.

Short-Term Outlook

Hurricane Ida made landfall on Sunday as a Category 4 storm near Port Fourchon, Louisiana, lashing critical U.S. oil infrastructure with winds up to 150 miles per hour (240 km per hour), Reuters reported.

The Louisiana Offshore Oil Port (LOOP), the largest privately-owned crude terminal in the United States, paused deliveries ahead of the storm after forecasts indicated possible impacts to its operational areas.

Prices are expected to initially rise on the news while traders sort through the details. We could see a situation where crude oil goes down because of lower demand, while gasoline rises because of a drop in supply.