Daily Management Review

Hurricane Nate left the oil market at rest


10/09/2017


The hurricane did not take place. Hurricane Nate, which could become the third consecutive devastating natural disaster in America, weakened and is no longer posing a serious threat. Meanwhile, oil companies have already begun work to restore production in the Gulf of Mexico.



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Even on Saturday, the level of the hurricane was raised to the second degree. It was reported that oil workers are evacuating their personnel and stop drilling rigs. It is estimated that almost 93% of oil production in the Gulf has been stopped, but the restoration of the work, apparently, will not take long.

This is confirmed by the quotes of oil, which have been growing slightly today after a landslide fall on Friday. However, now traders have other reasons for concern: the US can again introduce sanctions against Iran, and the oil market cannot leave this event without attention. President of the United States Donald Trump will announce his decision in the near future, media report.

It is also worth noting that the US markets are closed today, so that activity should not be expected closer to the evening of special. On the other hand, Chinese traders are starting trading after a long weekend. Yet, there were no serious movements in the Asian session. 

Another story that can support oil prices is the extension of the OPEC + agreement. So far, the countries participating in the transaction have been successfully fulfill their task of balancing supply and demand. However, a full-fledged effect will require additional steps next year, said the Secretary General of OPEC Mohammed Barkindo.

The agreement expires in March, and already now the oil-producing countries are discussing the possibility of prolongation. Barkindo also noted that no extraordinary meetings are planned. However, the media, citing sources, say that the meeting is still scheduled for October 20. Representatives of Libya, Nigeria and Iraq are also invited to participate in the meeting.

Apart from that, Russia and Saudi Arabia are ready to support the extension of the OPEC + deal if the oil market is not balanced by the time the agreements are concluded. The positions of Russia and Saudi Arabia are similar: if the oil market is not balanced by the end of the deal, that is, by the end of the first quarter of 2018, then it is necessary to extend the agreement on the reduction of production.

After an unexpected increase last week, we recall that the number of oil drilling in the US resumed its decline. In just a week, the number of drilling rigs fell by 2 units to 748 units. A week earlier, there was a growth of 6 pieces. However, these statistics had virtually no impact on the market.

source: reuters.com






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