Oil prices rise as US producers cut offshore output in Gulf of Mexico

26 August 2020 (Last Updated August 26th, 2020 12:10)

Oil prices have edged-up, supported by a drop in offshore output in the Gulf of Mexico by the US producers ‘ahead’ of Hurricane Laura.

Oil prices rise as US producers cut offshore output in Gulf of Mexico
Prices were also supported by optimism over trade talks between the US and China. Credit: Cathy Whitfield.

Oil prices have edged-up, supported by a drop in offshore output in the Gulf of Mexico by the US producers ‘ahead’ of Hurricane Laura.

Prices were also supported by optimism over trade talks between the US and China.

Brent crude oil futures added $0.10, or 0.2%, to $45.96 a barrel while US West Texas Intermediate (WTI) crude fell $0.05, or 0.1%, to $43.30 a barrel, Reuters reported.

However, gains were limited due to the renewed fears over Covid-19 resurgence in Europe and Asia and future immunity concerns.

OANDA New York senior market analyst Edward Moya was quoted by the news agency as stating: “The hurricane impact is short-term bullish, but that could be short-lived if the damage to the Texas and Louisiana coasts cripples demand for an extended time.”

On 25 August, the US energy industry prepared for a major hurricane strike, cutting crude production at a rate of 1.56Mbpd, which accounted for 84% of the Gulf crude oil production.

AxiCorp global markets strategist chief Stephen Innes said: “Markets are currently pricing in a possible near-term catastrophic gasoline shortage.”

Meanwhile, leading US-China officials spoke by phone on 24 August, confirming progress on resolving issues over the interim trade deal agreed in January.

Prices were also supported by data from the industry group American Petroleum Institute (API), which highlighted a decrease in the US crude stocks.