Hurricane Idalia gives oil prices a boost
Oil is up at a more than 2-week high on two factors: the first is a natural phenomenon and the second is a bigger than forecast draw on oil inventories.
Investors are increasingly worried about Hurricane Idalia, which is churning over the Gulf of Mexico. According to the EIA, the offshore Gulf of Mexico accounts for about 15% of US oil output and about 5% of natural gas production and some if not all of that is under threat because of hurricane disruption. Also, the American Petroleum Institute reported a 11.5-million-barrel fall in crude oil stocks, when analysts expected a drop of only 2.9 million barrels - another reason to expect tighter supplies and higher crude prices.
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Oil price
Now oil is up at or around a two-week high. There are two factors affecting the oil price. First of all is natural, the second is as a result of the American Petroleum Institute figures out yesterday. Investors increasingly worried about Hurricane Idalia which is churning over the Gulf of Mexico. According to the Energy Information Administration (EIA) the offshore Gulf of Mexico accounts for about 15% of US oil output and about 5% of natural gas production.
Gasoline
Later in the day as I said the Application programming interface (API) came through with some numbers which we can have a look at now to show you what's been happening. The Institute reporting 11.5 million barrels full in crude oil stocks with analysts expecting only a drop of 2.9 million. Gasoline and distillate stocks rising respectively by 1.4 and 2.5 million barrels.
US. crude oil
But you can see if you look at US Crude relatively strong day yesterday. In fact today we're building on that. Currently trading 81.42. The market's right in the middle of the span between 78.54 which we've got drawn on here from the low point we had back on the 3rd of August at the high we had at 84.40.
The FPR Strategic Petroleum Reserve
Also remember the FPR Strategic Petroleum Reserve? In March 2022 the Biden administration decided to release reserves at a rate of 1 million barrels of oil per day for about six months to bring prices down. At the start of the year it was announced that it was time to gradually replenish reserves.
On Monday the Department of Energy said it added another 600 barrels to the reserves. FPR is still sitting at a four decade low and at this rate it will take another decade to come back to 2021 levels.
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