Gulf Coast Braces for Twin Storms
August 24, 2020
This morning the energy markets are higher with two large storms approaching the US Gulf Coast being the news driving price higher. This will be the biggest market news over the next few days. Hurricane Marco is expected to make landfall this evening in Louisiana and tropical storm Laura could strengthen into a hurricane and hit eastern Texas/Louisiana late Wednesday or early Thursday. As well all know, the path of these storms in hard to predict and could change but traders will be watching to see how they progress. Many are concerned about the storm surge and refinery flooding. US Gulf of Mexico production has already been shut in at about 58%.
US producers increased crude oil rigs by 11 this past week to 183 crude oil rigs, according to Baker Hughes Rig Count.
Also supporting the upside in the markets is the talk about FDA approval of a possible COVID-19 treatment.
The Commitment of Traders Report showed that managed money funds in the oil market cut their net long positions in the week ending August 18th. The funds cut their net length long positions by 6,669 contracts on the week to 349,178 contracts on a combined NYMEX and ICE futures and options basis.
The InterContinental Exchange (ICE) said Brent crude oil speculators cut their net long positions by 1,292 contracts in the week ending August 18th to 203,816 contracts.
According to the US Department of Transportation, US motorists drove 224.7 billion vehicle miles in June, 36.5 billion vehicle miles fewer than the same month a year earlier, as government lockdowns to stop the spread of the coronavirus kept drivers home. The biggest year-over-year declines were in the Northeast at 19.2% and the West at 13.7%.