Oil prices rise as tropical storm disrupts US Gulf production

14 September 2020 (Last Updated September 14th, 2020 11:01)

Oil prices have edged-up as tropical storm Sally forces US firms to evacuate staff and kerb offshore production in the Gulf of Mexico.

Oil prices rise as tropical storm disrupts US Gulf production
Tropical Storm Sally has been predicted to strengthen into a category 2 hurricane and threaten the US Gulf region. Credit: Keri Jackson from Pixabay.

Oil prices have edged-up as tropical storm Sally forces US firms to evacuate staff and kerb offshore production in the Gulf of Mexico.

However, gains were capped due to concerns about oversupply and declining demand for fuel.

Brent crude LCOc1 rose by $0.09, or 0.2%, to reach at $39.92 a barrel while US West Texas Intermediate (WTI) CLc1 futures were up by $0.18, or 0.5%, at $37.51 a barrel, Reuters reported.

Tropical Storm Sally has been predicted to strengthen into a category 2 hurricane and threaten the prime oil region.

Oil production in the region has been interrupted by storms for the second time in less than a month after hurricane Laura.

On 17 September, the market monitoring panel of the Organization of the Petroleum Exporting Countries (OPEC) and its allies, together known as OPEC+, will meet to discuss compliance with deep cuts in supply.

According to Reuters, analysts don’t expect any further cuts.

On 13 September, oil and gas majors such as BP, Shell and Equinor evacuated staff from some of the offshore platforms after similar moves by Chevron and Murphy Oil the previous day.

Meanwhile, Libyan commander Khalifa Haftar has committed to ending the months-long blockade of oil facilities. This move is said to add more supplies to the market.

OANDA senior market analyst Jeffrey Halley was quoted by the news agency as stating: “The announcement that the blockade of Libyan oil export terminals may be about to end will add to the woes of OPEC+’s meeting this week.”