Hurricane Delta squeezes oil market, already tight on supply
Oil companies have closed up to 80% of their offshore facilities
FOX Business’ Jeff Flock gives an update on Hurricane Laura and its potential impact on southern states and oil companies in the area.
Hurricane Delta’s path through the Gulf of Mexico squeezed the oil market, driving up prices and forcing companies to evacuate facilities ahead of the storm’s arrival, according to reports.
Energy companies worked to secure facilities and clear out employees as early as Tuesday, when the hurricane reached Category 4 status, and wind speeds reach between 130-156 mph.
Safety precautions drove oil prices up by more than 3% on Tuesday, further boosted by a workers’ strike in Norway and possible stimulus from the government, Al Jazeera reported. U.S. petrol futures rose 2% and hit their highest level since Sept. 28.
The storm warnings and dangers forced closure of 29.2% of offshore crude oil production in the northern Gulf by Tuesday, as well. That number rose to more than 80% closures by Thursday, according to the Independent Commodity Intelligence Services.
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Bloomberg reported that the closures pushed oil beyond $40 a barrel as a result.
“Hurricane Delta has supported the latest recovery” in prices, said Ole Hansen, head of commodities strategy at Saxo Bank. “Renewed stimulus hopes have generally given assets a risk-on boost.”
The U.S. Bureau of Safety and Environmental Enforcement equated those closures to a decrease of 1.49m bbl/day and 1.33 billion cubic feet of gas since Wednesday.
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Remaining petrochemical plants and refineries in Louisiana and the surrounding area continue to monitor the storm before deciding whether or not to shut down operations as a precaution. The storm weakened to a Category 2, with a brief return to a Category 3, before landing in Louisiana and becoming Category 1.
Shell, BP and Chevron said they are taking the extra steps of shutting in production at all of their operated Gulf platforms and facilities, S&P Global reported.
"As a precautionary measure, Shell has shut in production at all nine of its assets and is evacuating all personnel," Shell said in an Oct. 7 statement. "We are in the process of safely pausing all drilling operations."
BP had only a day earlier closed and evacuated four offshore platforms ahead of the storm. Land-based facilities continue to operate, but the companies continue to monitor the storm’s progress.
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A LOOP spokesperson said Oct. 7 that the offshore port's marine terminal has suspended operations in advance of the storm.