Oil prices rose further on Wednesday, with WTI surpassing $ 40 a barrel as Hurricane Sally continues to wreak havoc in the Gulf of Mexico.
More than 27% of all offshore oil and gas production in the GoM remained closed on Wednesday.
Combined with the consumption of crude oil reported by the Energy Information Administration, the hurricane pushed up oil prices by nearly 5%.
As of 4:00 p.m. EDT, WTI was trading up $ 1.83 (4.78%) at $ 40.11 a barrel, with Brent trading up $ 1.71 (4.22%) on per day at $ 42.24 per barrel. This is the first time in almost two weeks that WTI has exceeded $ 40 a barrel.
The Category 2 hurricane that made landfall on Wednesday morning near Gulf Shores, Alabama, forcing 119 GoM production rigs to evacuate personnel – a figure that accounts for about 19% of all manned rigs in the Gulf, according to the US Bureau of Environmental Safety and Enforcement. The disruptions took 508,366 barrels of oil production and 805 MMcf / d of natural gas production offline. The closures represent 27.48% of all oil production in the Gulf and 29.70% of all natural gas production in the Gulf.
The EIA report on Wednesday which shows crude oil inventories drawdown of 4.4 million barrels for the last week, but inventories remain above the five-year average as demand continues to be depressed.
Historic precipitation from the hurricane is expected to reach 35 inches and nearly 400,000 homes and businesses are without power. Atypical for a hurricane, Sally’s slowness is expected to prolong the duration of high winds and heavy rains – and therefore the effect on US oil and gas production in the Gulf of Mexico.
By Julianne Geiger for OilUSD
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