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James Hyerczyk
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WTI and Brent Crude OIl

U.S. West Texas Intermediate and international-benchmark Brent crude oil futures are edging higher on Tuesday as traders brace for a hurricane to possibly deliver another blow to an already hurting energy industry.  Crude oil is currently sitting on a six-week high as Hurricane Nicholas threatens to bring heavy rain to Texas and parts of Louisiana that were still recovering from Hurricane Ida.

At 11:07 GMT, December WTI crude oil futures are trading $70.27, up $0.46 or +0.66% and December Brent crude oil is at $73.32, up $0.42 or +0.58%.

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Sentiment is also getting a boost from bullish remarks by the International Energy Agency. According to the IEA, bullish traders should prepare for a big demand rebound for the rest of the year. This follows a bullish future demand assessment by the Organization of the Petroleum Exporting Countries (OPEC) released on Monday.

Hurricane Nicholas Update

Reuters reported that evacuations were underway on Monday from offshore U.S. Gulf of Mexico oil platforms, as onshore oil refiners began preparing for rain and heavy winds from a second hurricane in as many weeks.

Hurricane Nicholas was taking aim at the central Texas coast with 75 miles per hour (120 kph) winds, threatening to bring heavy rain to Texas and parts of Louisiana still recovering from Hurricane Ida.

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Hurricane Ida Damage Update

More than 40% of the U.S. Gulf of Mexico’s oil and gas output remained offline on Monday, two weeks after Ida slammed into the Louisiana coast, according to offshore regulator Bureau of Safety and Environmental Enforcement (BSEE).

Damages to an offshore hub that pumps oil and gas from three major oilfields for processing onshore and power outages at onshore processing plants are responsible for the production losses.

OPEC Expects Delta Variant to Delay Oil Demand Growth

OPEC on Monday trimmed its world oil demand forecast for the last quarter of 2021 due to the Delta coronavirus variant, saying a further recovery would be delayed until next year when consumption will exceed pre-pandemic rates.

“The increased risk of COVID-19 cases primarily fueled by the Delta variant is clouding oil demand prospects going into the final quarter of the year,” OPEC said in the report.

“As a result, second-half 2021 oil demand has been adjusted slightly lower, partially delaying the oil demand recovery into first-half 2022.”

Vaccines Set to Unleash Pent-Up Oil Demand – IEA

After a three-month slide in global oil demand due to the spread of the Delta variant of COVID-19 and pandemic restrictions especially in Asia, vaccine roll-outs are set to power a rebound, the International Energy Agency (IEA) said on Tuesday.

“Already signs are emerging of COVID cases abating with demand now expected to rebound by a sharp 1.6 million barrels per day (bpd) in October, and continuing to grow until end-year,” the Paris-based IEA wrote in its monthly oil report.

Daily Forecast

Later today at 20:30 GMT, traders will get the opportunity to react to the latest crude oil and fuel products inventories for the week-ending September 10 from the American Petroleum Institute (API).

U.S. oil demand continues to point higher so we’re looking for another drawdown in crude oil and gasoline. Crude oil demand reached a record high last week while product inventories fell to their lowest levels in three years.

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