Roughly 12% of crude production in Gulf of Mexico offline due to hurricane disruption
September 17, 2024
The disruptions to production from Hurricane Francine supported a rebound in prices yesterday. The outlook for an interest rate cut and the US dollar index that has been falling is also offering support to energy prices. There is talk that there is a chance for a 50 point cut to rates and the fact that this is gaining traction has the market stirred up and this is also helping to support the energy markets for now. The Fed meeting begins today and should end around noon on Wednesday. The consensus right now is that the Fed will lower the overnight lending rate to banks by 25 points. This idea appears to already be baked into the market so much so that if that is all the Fed does it might disappoint the market and prices sell off. If the Fed on the other had lower rates by 50 points this could be positive for the markets and support energy and equities markets.
According to data from Kpler and a shipping agent, Libyan crude exports reached about 550,000 bpd las week, a three-fold increase on the previous week.
UBS lowered its forecast for the average price of Brent crude oil in 2024 by $4 to $80 per barrel, with the forecast for Q4 2024 lowered to $75 per barrel from $83. UBS now sees Brent averaging $75 per barrel in 2025 and 2026, a $5 per barrel reduction. The analysts have suggested that OPEC+ will be forced to postpone the unwinding of its voluntary production cuts, with any meaningful increases now seen coming in 2027 or 2028, compared to earlier expectations of a return by mid-2025.
Roughly 12% of crude production remains shut in the Gulf of Mexico and abotu16% of natural gas production.