WTI US Crude Oil Talking Points:
- Hurricane IDA threatens Oil refineries, production falls approximately 95% or 1.7 million bpd as the Gulf remains offline
- Oil prices fall in anticipation of OPEC+ meeting on Wednesday
- US Gasoline prices rise – Power outages in Louisiana may continue for weeks causing further disruptions to production
Oil Struggles Below $70 Despite Production Disruptions Arising From Hurricane IDA
US Crude Oil (WTI) continues struggled to sustain the momentum of the uptrend recently observed despite further supply constraints that supported the bullish rally throughout last week.
As Hurricane IDA wreaked havoc along the Gulf of Mexico, Oil refineries suspended production, wiping out approximately 95% from the Gulf’s total Oil Output or approximately 1.72 million barrels of oil per day.
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With heavy rains and winds sweeping through the coast of Louisiana on Sunday, the Louisiana Offshore Oil Port (LOOP), a deep water port that accounts for approximately 13% of the nation’s foreign Oil, paused production as the Category 4 storm threatened to destroy the infrastructure of thelargest privately-owned import and export terminal in the United States.
Meanwhile, power outages in Louisiana left approximately 1.2 million homes and business’ in the dark with further electricity disruptions expected to hinder the ability for Oil and Gas production to return to normal levels once damages have been assessed and it is safe for workers to return to the rigs.
As Oil traders continue to price in the potential for further disruptions, a rise in Gasoline prices supported Crude Oil price action allowing bulls to maintain resilience above $69.00 per barell.
US Crude Oil (WTI) Price Action
With US Crude Oil currently trading below trendline resistance, the Commodity Channel Index (CCI) continues to edge higher towards the upper bound of the range, threatening overbought territory. If bulls are able to drive prices above both trendline resistance and the key psychological level of $70,00 the upside may prevail.
US Crude Oil (WTI) Daily Chart
Chart prepared by Tammy Da Costa using TradingView
Will OPEC+ Agree to increase production despite the spread of the Delta variant?
After agreeing to increase Oil production by 400,000 barrels per day, OPEC+ (The Organization of Petroleum Exporting Countries and allies including Russia) will be meeting on Wednesday, 1 September 2021 to discuss the further increases as the spread of the Delta variant weighs on Oil demand.
With rising inflation already weighing on consumer sentiment, the outcome from the OPEC+ meeting may further assist in the catalyzation of price action for the imminent move.
— Written by Tammy Da Costa, Analyst for DailyFX.com
Contact and follow Tammy on Twitter: @Tams707
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