Oil futures climbed on Tuesday, with prices finding support a day after settling at their lowest price since January, as Hurricane Ian leads to the shut down of some platforms in the Gulf of Mexico and as a dollar rally takes a breather.
- West Texas Intermediate crude for November delivery CL.1, +2.63% CL00, +2.63% CLX22, +2.63% rose $1.06, or 1.4%, to $77.77 a barrel on the New York Mercantile Exchange. WTI on Monday posted the lowest finish for a front-month contract since Jan. 3.
- November Brent crude BRNX22, +2.80%, the global benchmark, was up $1.48, or 1.8%, at $85.54 a barrel on ICE Futures Europe. The most active December Brent contract BRN00, +2.73% BRNZ22, +2.73% rose $1.40, or 1.7%, to $84.36 a barrel.
- Back on Nymex, October gasoline RBV22, +4.09% rose 3% to $2.4563 a gallon, while October heating oil HOV22, +3.91% was up 3.9% at $3.2534 a gallon.
- October natural gas NGV22, -2.12% fell 2.2% to $6.75 per million British thermal units.
Hurricane Ian strengthened, lashing the western tip of Cuba, as it proceeded on a path that could see it make landfall on Florida’s western coast. Chevron Corp. CVX, +1.65% and BP PLC BP, +0.53% BP, +2.27% on Monday said they had shut in production at some Gulf of Mexico platforms as they braced for the hurricane.
The ICE U.S. Dollar Index DXY, -0.25%, a measure of the currency against a basket of six major rivals, was off 0.3% after hitting a 20-year high on Monday. The dollar’s surge versus major rivals has taken a toll on commodities, stocks and other assets. The dollar’s rally comes as investors fear aggressive monetary tightening by the Federal Reserve and other major central banks will lead to a sharp global slowdown in economic growth that will crimp demand for crude oil.
Meanwhile, the oil selloff could prompt the Organization of the Petroleum Exporting Countries and its allies, known as OPEC+, to curb output when they hold their monthly meeting on Oct. 5, analysts said.
“The group will likely be getting uneasy with the degree of weakness that we have seen in the market and so there is the very real possibility that we see OPEC+ announce supply cuts in order to support the market,” said Warren Patterson, head of commodities strategy at ING, in a note.
“Clearly though, if we are to see cuts, they will need to be quite a bit larger than the 100,000 barrels a day agreed at the last meeting in order to have a meaningful impact on the market,” he said.
Still, overall, “oil remains a sellers’ market with worries about a global recession and high interest rates intensifying,” said Fawad Razaqzada, market analyst at City Index and FOREX.com, in a market update.