Crude oil narrowly escapes Hurricane Laura as Exxon is booted from Dow Jones

Crude oil narrowly escapes Hurricane Laura as Exxon is booted from Dow Jones

West Texas Intermediate closed out just above $43 Friday as Hurricane Laura swept through the US Gulf Coast, threatening the very heart of oil production. Texas, Louisiana, Mississippi, and Alabama account for ~17% of the countrys crude production, according to the Energy Information Administration (EIA).To get more news about WikiFX, you can visit wikifx official website.   By Saturday, only 181 platforms remained unmanned, down from 257 just the day before, after efforts to evacuate personnel from production platforms and rigs as Laura made landfall. The data came from the U.S. Department of the Interior‘s Bureau of Safety and Environmental Enforcement (BSEE). Also according to the BSEE, approximately 84.3% of the Gulf of Mexico’s production was shut-in, as well as 60% of natural gas production; by Saturday, the figures reported were closer to 82.13% and 58.84% respectively.   CNN argued that the current ‘supply cushion’ will make for very little impact on prices either way, citing how previous natural disasters like Hurricanes Katrina and Rita in 2005, and Harvey in 2017 saw prices spike due to limited supply and high demand. In 2020 -- a time in which people are not traveling, where demand is down and supply is up (with storage nearing capacity at the height of the pandemic), this is unlikely to happen.   Just last week, crude inventories were down for the fifth week running, with the EIA reporting a decline of 4.7 million barrels, beating the consensus of 4.3 million. Still, at 507.8 million barrels, crude inventories remain about 15% higher than the 5-year average for the current time of year.   That decline in supply sent crude up to $43.7 Wednesday -- a level we‘ve not seen since early March -- and marking the third consecutive session of gains. The report also showed the Cushing, OK facility’s supply was down by 300k barrels for the week ending August 21st.

Though demand is recovering, forecasters agree that we wont see 2019 demand levels again until at least 2022. Reports from the International Energy Agency, the EIA, and OPEC all confirm bearish outlooks, with the IEA expecting use to drop by 500k barrels a day over the remainder of the year, while OPEC sees the figure closer to a drop of 1 million barrels per day year-on-year.   Another blow for the energy sector came from Exxon‘s departure from the DJIA, ending its 92-year run on the index and leaving Chevron as the last oil company component. Replaced by Salesforce, the shift towards technology stocks may have more to do with Exxon’s own decline in recent years than reflective of the energy sector. In May, the company posted its first-ever quarterly loss since its merger with Mobil in 1999, to the tune of $610 million over Q1. Year-to-date, Exxon shares are down 41.7% compared to Chevrons 29.5% loss.