Bad Weather Can Hardly Change the Narrow Range of Oil Prices

The gulf of Mexico has been hit by storms and hurricanes, shutting down a number of offshore oil production facilities and coastal refineries. Analysts said that while the bad weather had spurred oil prices higher in recent days, it was not expected to change the current narrow range of oil prices.

The shutdown of offshore oil production in the Gulf of Mexico has exceeded 1.55 million barrels a day, accounting for nearly 85 percent of the region's total crude output, according to data from standard & Poor's Global Platts. Nine refineries along the Gulf Coast were shut down due to bad weather, shutting down 2.9 million barrels a day of refining capacity, or about 15 percent of total U.S. refining capacity, separate data showed.

As a result, light crude futures for October delivery rose on the New York Mercantile Exchange, but failed to break through march levels. Brent crude futures for October delivery in London also briefly traded above $46 a barrel before falling.

Analysts generally agree that the impact of bad weather on crude oil prices is temporary, and that market supply and demand affected by coVID-19 is the key to determining crude prices in the long run.

Doug Leggate, head of US oil and gas research at Bank of America, described the support for oil prices from the bad weather as "mild and short-lived".

Bjornal Tunhaigen, senior vice President of Resta Energy, said bad weather will affect short-term oil supplies, but it is the outbreak that is the bigger hurricane for the market, and the prospects for economic recovery that are the focus of the market.

Separately, data released by the US Energy Information Administration on June 26 showed that us commercial crude oil inventories fell by 4.7 million barrels month on month last week, in line with market expectations. But the good news did not lead to a significant rebound in oil prices, reflecting the market's lack of optimism about the prospects for an economic recovery.

Analysts generally believe that Opec and non-OPEC oil producers will maintain the current level of crude oil production this year, and once the global economy gradually recovers from the epidemic, the crude oil market may appear in the future supply gap, which may push the international crude oil prices to a breakthrough.