Hurricane Florence Driving Crude Oil and Gasoline Higher
$USO, $OIL, $UGA
Crude Oil and Gasoline posted the biggest gainers since late June as Hurricane Florence threatened US East Coast fuel markets and sanctions began crimping Iranian Crude Oil exports.
Crude Oil futures in New York climbed 2.5%, while gasoline futures popped higher by 2.8% Tuesday. East Coast motorists may see “dramatic” spikes in gasoline prices, according to AAA, as mass evacuations stretch supplies and Florence’s heavy rains imperil major fuel pipelines. Meanwhile, France and South Korea are shunning Iranian Crude Oil, forcing the Islamic Republic to effectively remove some Crude Oil from global markets.
London-traded Brent Crude which is more sensitive to global supply disruptions, widened to the largest premium to the US benchmark Crude in almost 3 months.
As Florence moves closer to the southeastern coast of the US, the storm appears likely to strengthen, forecasters said. The hurricane is poised to be the strongest to slam North Carolina in 64 years, according to the US Hurricane Center.
Gasoline futures jumped 5.5c to settle at $2.0142 a gal on the New York Merc.
West Texas Intermediate for October delivery climbed $1.71 to end the session at $69.25 bbl on the NYMEX, the highest level in a week.
Brent Crude for November settlement advanced $1.69 to settle at $79.06 on the ICE Futures Europe exchange. The global benchmark Crude’s premium to WTI for the same month was at $10.02.
US nationwide crude inventories probably fell 1.75-M bbls last week, according to a survey of analysts. Supplies at the Key storage hub in Cushing, Oklahoma, rose by an estimated 900,000 bbls last week, according to a market forecast.
The American Petroleum Institute is scheduled to release its weekly count of stockpiles later Tuesday, followed by the US government’s tally last Wednesday.
Some other Key Crude Oil-market figures, news and events:
- OPEC and its allies are in constant contact on production, Russian Energy Minister Alexander Novak said.
- Oil producers are signaling their concern that Permian Basin pipelines will not be ready on time next year with a 5X jump in hedging designed to protect against bottlenecks in America’s biggest shale field.
- Aramco was said to be ready to supply full contractual Crude Oil volumes to at least 3 buyers in Asia for October.