Hurricane Harvey: Should we be Looking to Short Oil? - Forex News by FX Leaders

Hurricane Harvey: Should we be Looking to Short Oil?

Posted Monday, August 28, 2017 by
Rowan Crosby • 1 min read

Tropical Storm Harvey has caused mass flooding along the Texas coast, and in the process shut down more than 10 percent of U.S. fuel-making capacity.

What’s interesting though is that the reaction has largely been in gasoline, rather than crude oil. As it stands Gasoline futures have surged as much as 6.8% while oil has been holding steady around $48. Clearly the impact of the storm is on the refiners more so than actual oil supplies. As a result it was the distillates that spiked higher.

Oil

Seasonality

Oil like many commodities are very seasonal in nature. As it stands we’re at a ‘shoulder’ in the demand curve for oil. Oil demand increases prior to the US summer period as there is strong demand from drivers who head off on their summer holiday road trips – known as the 'driving season'. In the following months that demand drops and prices follow.

The fact that we have seen such a muted response from Harvey suggest that we are ripe to sell off in crude. Any pop to the upside might be a good opportunity to short oil as the seasonal weakness kicks in.

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About the author

Rowan Crosby // Asia-Pacific Analyst
Rowan Crosby is a professional futures trader from Sydney, Australia. Rowan has extensive experience trading commodities, bonds and equity futures in the Asian, European and US markets. Rowan holds a Bachelor of Finance and Economics degree and is focused heavily on Investment Finance and Quantitative Analysis.
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