Oil prices advanced on Tuesday as storms forced a major shutdown of energy production in the Gulf of Mexico.
The West Texas Intermediate for October delivery climbed 73 cents to settle at 43.35 U.S. dollars a barrel on the New York Mercantile Exchange, while Brent crude for October delivery rose 73 cents to close at 45.86 dollars a barrel on the London ICE Futures Exchange.
“The storms in the Gulf of Mexico are causing turmoil on the oil markets,” Eugen Weinberg, energy analyst at Commerzbank Research, said in a note on Tuesday.
Tropical storm Marco has abated and been downgraded, while Laura is expected to hit the U.S. Gulf Coast as a major hurricane late Wednesday or early Thursday.
The U.S. Bureau of Safety and Environmental Enforcement on Tuesday estimated that 84.3 percent of offshore oil production in the Gulf of Mexico had been shut in as a precaution, along with nearly 61 percent of natural-gas production.
“A number of refineries on the coast, where nearly half of the entire oil processing industry is located, have likewise suspended production ahead of Laura’s expected landfall,” said Weinberg, adding “tropical storms also have an impact on the transport of crude oil and oil products.”
Looking ahead, analysts said crude oil is expected to trend sideways, as the risks and opportunities have been balanced for weeks now.
