Oil Price Fundamental Daily Forecast – US Oil Industry Dodges Widespread Damage to Platforms and Refineries

U.S. West Texas Intermediate and international-benchmark Brent crude oil futures finished mixed on Friday as Hurricane Laura left a trail of destruction throughout Louisiana and Texas, while passing the heart of the U.S. oil industry without causing any widespread damage to platforms and refineries and companies worked around the clock to restart operations.

On Friday, October WTI crude oil futures settled at $42.97, down $0.07 or -0.16% and December Brent crude oil finished at $46.25, up $0.24 or 0.52%.

Despite Friday’s set back, WTI and Brent crude oil futures were still able to post weekly gains of 1.22% and 1.86% respectively. The benchmarks hit five-month highs during the week as U.S. producers cut crude output ahead of Laura at a rate close to the level of 2005’s Hurricane Katrina.

Hurricane Laura, since downgraded to a tropical depression, hit Louisiana early on Thursday with winds of 150 miles per hour (240 km per hour). The storm killed at least six people, damaged buildings and felled trees. Power was cut to hundreds of thousands in Louisiana and Texas, but refineries were spared from massive flooding, Reuters reported.

Production Update

The U.S. government said in a report on Friday that shut offshore crude oil production in the U.S.-regulated Gulf of Mexico remained at 84.3%, or 1.55 million barrels per day (bpd).

Nine refineries had shut around 2.9 million bpd of capacity, or 15% of U.S. processing capacity, ahead of the hurricane.

Late on Thursday, the Port of Houston, the top U.S. crude oil export hub accounting for about 600,000 bpd of shipments, was in the process of reopening to commercial shipping.

Damage Assessment and Restarting of Facilities

Shell Oil said it was beginning to redeploy personnel to all its assets in the Gulf of Mexico that were not impacted by the storms, including those in the Norphlet and Mars Corridors.

Valero Energy Corp began restarting its 335,000 bpd Port Arthur, Texas, refinery on Friday, while Exxon Mobil was preparing to restart its 370,000 bpd Beaumont, Texas, refinery.

However, repairs to Citgo Petroleum’s 418,000-bpd Lake Charles, Louisiana, plant could take four to six weeks, according to Mizuho Securities. The company did not immediately reply to a request for comment, Reuters reported.

U.S. Drilling Rig Count Steady, Posts First Monthly Increase Since December – Baker Hughes

U.S. energy firms kept the number of oil and natural gas rigs operating unchanged the week-ending August 28 with some analysts expecting producers to have shut rigs before Hurricane Laura slammed into the Gulf Coast, Reuters reported.

U.S. oil rigs fell three to 180 in the week to August 28, while natural gas rigs rose three to 72.

In August, the oil and gas rig count rose by three to 254, the first monthly increase since December 2019, according to data on Friday from energy services firm Baker Hughes Co.

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