Delta Variant Pushing Oil Demand Lower
September 13, 2021
Tropical Storm Nicholas formed in the Atlantic and is expected to hit Texas on Monday night. This storm should impact offshore oil production in the Gulf of Mexico as some companies have evacuated personnel. The coast of Louisiana is now expected to get 10 to 15 inches of rain which could impact refineries again and reduce their activity. Export could also be impacted again.
The Bureau of Safety and Environmental Enforcement reported on Friday that 66% (1.2 million bpd) of all Gulf of Mexico offshore oil production and 76% (1.68 mcf/day) of all off-shore natural gas production is still shut down due to Hurricane Ida.
The EIA reported last week that US crude production fell las week by 1.5 million bpd due to hurricane Ida shutdowns. This news along with the huge drop in gasoline stocks of 7.2 million barrels last week, decrease in refinery utilization, and another increase to implied gasoline demand were supportive fundamentals for gasoline prices last week.
The Baker Hughes Rig Count said that crude oil rigs were up 7 in Friday’s reports. Total oil rigs are now at 401 rigs. Since August 21, 2020, 229 oil rigs have come back online.
The markets are trying to bounce and follow through higher on last week’s recovery from a key support/Moving average. But just a bounce keep this market trading in its range of uncertainty. If the bulls hope to push prices higher still and continue the uptrend they have work to do and most take out the old recent highs.
Two OPEC+ sources said that OPEC will likely revise down its 2022 oil demand forecast amid the spread of the Delta variant.