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Oil & gas
Oil takes more hits before OPEC+ Meet amidst Delta Variant & Hurricane Ida
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By EntekHub.com - Posted on
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Oti Francis
Oil might be moving for its greatest monthly loss yet since October 2019. Stakeholders and investors are reconsidering their hopes on the additional OPEC+ production and the resumption of crude output after the U.S. overcomes the Hurricane Ida saga.
The focus has been on the West Texas Intermediate which was slightly stable above $69 a barrel after its Monday’s gain of about 0.7%. Also, crude producers in the Gulf of Mexico are hoping to gradually resume activities after the Ida impact in Louisiana. However, the local refineries and plants might need more recovery time.
OPEC the Organization of Petroleum Exporting Countries and its allies are expected to converge on Wednesday, 1 Sept 2021 to evaluate the market situation and the potentials for demand as COVID persists. Hopefully, the effect the delta variant has had on oil consumption might dissipate and the body hopes to make moves of including additional 400,000 barrels daily.
Unrelenting, crude seems to have survived a rough hit this August, with many alternating weeks of gains and losses. The month has seen investors scampering over COVID and the volatility of the US dollar. The containment of the delta outbreak in key importing economies like China has not positively impacted the US benchmark which took a 6% hit this August.
Speaking on this development, Daniel Hynes, senior commodities strategist at Australia & New Zealand Banking Group Ltd thinks players in the market might be anticipating a lot from the OPEC+ meeting. “The tide has turned in recent weeks, with the market a lot more comfortable that the recovery in demand has not been derailed by the delta variant,” “However, the market will be watching the OPEC+ meeting for any signs they are seeing demand is not rebounding as strongly as they expected.”
| Prices: |
| WTI for October delivery added 1 cent to $69.22 a barrel on the New York Mercantile Exchange at 7:33 a.m. in London. Brent for October settlement was flat at $73.41 a barrel on the ICE Futures Europe exchange. The November contract, which was the most active, was little changed at $72.20 a barrel. |
Data Tuesday showed that the movement restrictions to curb delta variant spread in the Chinese capital Beijing had a positive effect. A Bloomberg report of economists reveals that the official manufacturing purchasing managers’ index slumped to 50.1 from 50.4 in July, a little lower than the median estimate.
The OPEC+ alliance has reignited about 45 percent of the unprecedented volume shuttered last spring when the delta variant broke out. Under a plan led by Saudi Energy Minister Prince Abdulaziz bin Salman, the OPEC+ will return the rest in monthly increments of 400,000 barrels a day towards the last quarter of 2022.
In America, Hurricane Ida is still a major concern and affected energy companies are moving to resume operations. US largest pipeline system for refined oil products, Colonial Pipeline Co. believes it would restart gasoline Line 1 and diesel and jet fuel Line 2 from Texas to North Carolina on Monday.
Credit: Bloomberg, Rigzone