Crude oil extends rally as US Gulf braces for Tropical Storm Ida

An overnight crude oil rally extended in midmorning trading Aug. 27 as Tropical Storm Ida took aim at the central US Gulf Coast.

At 1519 GMT, NYMEX October WTI was up $1.15 at $68.57/b and ICE October Brent was $1.18 higher at $72.25/b.

Latest forecasts from the US National Hurricane Center showed Tropical Storm Ida attaining major hurricane status before making landfall along the Louisiana coast late Aug. 29.

Upstream producers said Aug. 26 they have begun moving nonessential crews from oil and gas platforms in the US Gulf of Mexico as the storm approached Gulf waters toward Louisiana.

NYMEX September RBOB was up 72 points at $2.2626/gal and September ULSD was 1.99 cents higher at $2.1031/gal.

Current forecast tracks showed the storm crossing the heart of the US Gulf of Mexico crude production. The US Gulf produces about 1.8 million b/d of crude, representing 17% of total US output, according to Energy Information Administration data.

Shell said it has shut in production at its Stones field as it prepares to detach the production ship from its buoy and move it to a safer location. Shell has also begun evacuating nonessential personnel from its US Gulf assets, "as a precautionary measure," the company said in an Aug. 26 statement.

Chevron was moving nonessential crews from its "operated facilities," the company said in a statement, although it added production at the installations remained at normal levels.

Murphy Oil, which has several platforms in the Central Gulf region, is making arrangements to evacuate nonessential personnel from them, spokesperson Megan Larson said Aug. 26, but declined specifics.

NHC has issued a hurricane watch for the central USGC stretching from Cameron, Louisianan, to the Mississippi/Alabama border.

A weaker dollar added further support to crude prices. The ICE US Dollar Index fell to 92.765 midmorning, on pace for the lowest close since Aug. 16.

The dollar moved significantly lower on the heels of comments from Federal Reserve Chairman Jerome Powell Aug. 27 that the central bank may begin tapering its bond buying program before the end of 2021. The market had largely expected Powell to announce the start of the taper program in September, and the unexpectedly dovish stance weighed heavily on the dollar.