Crude oil futures were up in Asia’s mid-morning trade on August 30 after Hurricane Ida caused the shutdown of more than 95 percent of the Gulf of Mexico’s oil output, while the US currency weakened on the US Federal Reserve’s latest hints. The ICE October Brent futures contract was 35 cents/b higher at $73.05/b at 10:25 a.m. Singapore time, while the NYMEX October light sweet Crude contract was three cents/b higher at $68.77/b.
With Hurricane Ida forcing the evacuation of offshore rigs and restricting oil supplies in the short term, oil prices were trading higher. The US National Hurricane Center upgraded Ida to a Category 4 hurricane on August 29 with maximum sustained winds of 150 mph before making landfall south of New Orleans just before noon CT. This made it one of the most powerful hurricanes ever to impact the US Gulf Coast. However, Ida was still a Category 4 hurricane around 4 p.m. CT, with sustained winds of 130 mph.
The US Bureau of Safety and Environmental Enforcement reported on August 29 that 95.65% of US Gulf Crude oil production, or 1.741 million barrels per day, was shut in, and 93.75 percent, or 2.091 billion cubic feet per day, of the region’s 2.2 billion cubic feet per day of natural gas production. In addition, an estimated 288 offshore platforms were evacuated, accounting for 51.4 percent of the total in the US Gulf.
The US dollar has also fallen since Federal Reserve Chairman Jerome Powell stated at the recent Jackson Hole Symposium that the central bank could start trimming its bond-buying program before the end of the year. Powell’s unexpectedly dovish approach weighed severely on the dollar, as the market had expected him to announce the start of the tapering program in September.