Crude Oil prices soared on Tuesday, rebounding from Monday’s heavy losses which saw crude oil prices hit a three-week low.
Pushing prices higher was the effect Hurricane Zeta was having on oil producers and their platforms in the Gulf of Mexico in the US. BP, Chevron and Equinor all evacuated platforms in the area whilst Royal Dutch Shell paused their drilling and BHP Group Ltd withdrew its staff from their Gulf of Mexico offshore facilities.
According to Reuters, Energy producers shut 16%, or 293,656 bpd (barrels per day) of oil and 6% of natural gas output, or 162.57 million cubic feet per day on Monday. On Tuesday, it was reported that according to the Bureau of Safety and Environmental Enforcement, 49.45% of Gulf oil production and 55.35% of natural-gas production in the region was closed off. The area is of significant importance to the US energy industry. The offshore oil production in the Gulf of Mexico accounts for around 17% of total U.S. crude oil output and approximately 5% of total U.S. dry natural gas production.
Tuesday Turnaround for Crude Oil
Concerns over demand for the commodity reduced by the pandemic, especially in Europe and Africa, saw a mass sell-off pushing prices to a three-week low. However, Tuesday has been very much a different story with Crude Oil up 2.67% at the time of writing and Brent Oil up 2.03%, as the area endures its 11th hurricane of the season.
The hurricane is adding further pressure on the United States economically which is dealing with a second wave of the coronavirus. Globally, the world’s oil producers, including the US, are having to contend with needing to absorb increasing amounts of oil from Libya, which isn’t part of the OPEC restraint deal.
However, offering some hope for the oil industry, particularly in the US is a rising oil rig count. According to Baker Hughes, the total active U.S. rig count rose 5 to 287 last week, the fifth consecutive week of gains. Oil bulls can also point to an upcoming winter where fuel consumption increases, for further hope. But at the moment all crude-oil interested eyes are events in the Gulf of Mexico and Hurricane Zeta
