WTI Crude Oil Steady as Oil Production in Gulf of Mexico Impacted by Storms
Arslan Butt • 1 min read
WTI crude oil is set to start the brand new week on a cautious footing, with prices holding steady over worries of possible supply disruptions as storms strike the Gulf of Mexico and take down over half of the region’s oil production activities. At the time of writing, WTI crude oil is trading at around $42.25 per barrel.
On Sunday, the Caribbean and Gulf of Mexico regions were hit by Hurricane Marco and Tropical Storm Laura, causing oil companies to shut down 58% of oil production and 45% of natural gas production. The impact of both storms could disrupt oil and natural gas production by the US temporarily.
In addition, crude oil enjoys support from OPEC’s renewed commitment to ensure adherence to the deeper supply cuts that were agreed upon between the group and their allies. After their meeting last week, leading oil producers confirmed that countries that pumped more than the targets set between May and July would have to compensate by cutting crude production by over 1 million bpd in August and September.
However, gains in crude oil prices remain limited as markets continue to focus on the fallout from the coronavirus pandemic on global oil demand. As the number of infections and death toll continue to climb higher despite lockdown and other measures, there is considerable uncertainty on when the global economy can rebound and return to pre-pandemic levels of growth.