Skip to main content

Oil prices were little changed on Tuesday, as energy infrastructure on the U.S. Gulf Coast braced for a hurricane, but gains were capped as a stronger dollar and report of rising stockpiles at the Cushing, Oklahoma hub weighed.

U.S. West Texas Intermediate (WTI) crude futures rose 7 cents to settle at $69.87 a barrel after earlier hitting a session high of $71.40. U.S. markets were closed on Monday for Labor Day.

Brent crude, which traded on Monday, was ended 2 cents firmer to settle at $78.17 a barrel, down from a session high of $79.72.

Story continues below advertisement

Both benchmarks jumped earlier in the session as more oil producers pulled employees out of Tropical Storm Gordon’s path and shut-in 9 per cent of U.S. Gulf of Mexico oil and gas production on Tuesday.

But the storm, expected to make a nighttime landfall as a category 1 hurricane, shifted eastward, reducing its threat to major production areas and most Gulf Coast refineries.

Vessel traffic along the U.S. Gulf Coast was also under restrictions ahead of Gordon.

The Gulf of Mexico is home to 17 per cent of U.S. crude oil production and 5 per cent of natural gas output daily, according to the U.S. Energy Information Administration. On land, the Gulf Coast serves as a major U.S. refining hub.

Prices moved lower, however, as market participants saw the market as overbought.

“Initial reaction this morning appeared exaggerated as disruption to Gulf of Mexico production infrastructure isn’t likely to extract a major amount of crude from the market,” Jim Ritterbusch, president of Ritterbusch and Associates, said in a note. “The larger impact of the storm is apt to fall on Gulf coast refinery activity that could be affected by power outages.”

Weighing on oil prices, Cushing, Oklahoma, crude inventories rose nearly 754,000 barrels from Aug. 24 to Friday, traders said, citing a report from market intelligence firm Genscape.

Story continues below advertisement

A rising U.S. dollar index also pushed crude futures lower. A stronger dollar makes greenback-denominated oil more expensive for holders of other currencies.

Global oil markets have tightened over the last month, pushing up Brent prices by more than 10 per cent since the middle of August. Investors anticipate less supply from Iran as U.S. sanctions on Tehran begin to bite.

Harry Tchilinguirian, oil strategist at BNP Paribas, warned of “supply issues” into 2019.

“Crude oil export losses from Iran due to U.S. sanctions, production decline in Venezuela and episodic outages in Libya are unlikely to be offset entirely by corresponding rises in OPEC+ production,” Tchilinguirian said.

BNP Paribas expects Brent to average $79 in 2019.

This content appears as provided to The Globe by the originating wire service. It has not been edited by Globe staff.

Report an error
Tickers mentioned in this story
Unchecking box will stop auto data updates
Comments

Welcome to The Globe and Mail’s comment community. This is a space where subscribers can engage with each other and Globe staff. Non-subscribers can read and sort comments but will not be able to engage with them in any way. Click here to subscribe.

If you would like to write a letter to the editor, please forward it to letters@globeandmail.com. Readers can also interact with The Globe on Facebook and Twitter .

Welcome to The Globe and Mail’s comment community. This is a space where subscribers can engage with each other and Globe staff. Non-subscribers can read and sort comments but will not be able to engage with them in any way. Click here to subscribe.

If you would like to write a letter to the editor, please forward it to letters@globeandmail.com. Readers can also interact with The Globe on Facebook and Twitter .

Welcome to The Globe and Mail’s comment community. This is a space where subscribers can engage with each other and Globe staff.

We aim to create a safe and valuable space for discussion and debate. That means:

  • All comments will be reviewed by one or more moderators before being posted to the site. This should only take a few moments.
  • Treat others as you wish to be treated
  • Criticize ideas, not people
  • Stay on topic
  • Avoid the use of toxic and offensive language
  • Flag bad behaviour

Comments that violate our community guidelines will be removed. Commenters who repeatedly violate community guidelines may be suspended, causing them to temporarily lose their ability to engage with comments.

Read our community guidelines here

Discussion loading ...

Due to technical reasons, we have temporarily removed commenting from our articles. We hope to have this fixed soon. Thank you for your patience. If you are looking to give feedback on our new site, please send it along to feedback@globeandmail.com. If you want to write a letter to the editor, please forward to letters@globeandmail.com.
Cannabis pro newsletter