Oil at 6-Week High, Growing Fears of Further Oil Disruptions from Storm Nicholas

Concerns of another incoming storm have caused oil prices to hit a new high on Tuesday. The struggling oil production industry may face further disruptions in Texas.

Oil prices went up for three consecutive days with Brent crude reaching its highest by 40 cents at $73.91 a barrel. U.S West Texas Intermediate crude oil also went up 45 cents to $70.90 a barrel.

Tropical Storm Nicholas was reported to be heading towards coastal Texas and Louisiana at speeds of 70 miles per hour, causing mandatory evacuations to take place in the region and at offshore U.S Gulf of Mexico Oil Platforms. Investors have displayed worry over further oil supply disruptions which may be caused by the storm.

According to the Bureau of Safety and Environmental Enforcement BSEE, over 40% of U.S Gulf Oil and gas output has been shut down on Monday. The government has planned to provide crude oil to eight different oil companies through an auction. This oil will be provided from the emergency reserve for an agreed price.

China is planning to supply oil from strategic petroleum reserves SPRs to help boost global supply. According to the Energy Information Administration, U.S oil output from natural shale formations is expected to rise by 66,000 bpd to 1.8 million bpd in October. This will be the highest output expected since April 2020.

OPEC has reduced its forecast of oil demand for the remaining year as the delta variant continues to affect countries. The initial forecast was 4.15 million bpd, but has now been reduced to a 3.28 million bpd in the updated forecast reports.