Crude climbs on weaker dollar, bullish US unemployment report, Hurricane Ida disruptions

Crude oil futures settled higher Sept. 2, propelled by a weaker dollar a bullish US unemployment report, and extended disruptions from Hurricane Ida.

NYMEX October WTI settled $1.40 higher at $69.99/b and ICE November Brent climbed $1.44 to $73.03/b.

An overnight oil price rally accelerated in early US trading following the release of Department of Labor data showing weekly initial jobless claims was 340,000 for the week ended Aug. 28. The jobless claims print marked a decline of 14,000 from the week prior and was the lowest level since the start of the pandemic lockdowns in mid-March 2020.

NYMEX October RBOB settled up 5.26 cents at $2.1635/gal and October ULSD finished 3.88 cents higher at $2.1677/gal.

The weekly unemployment figure beat market expectations and suggested the impact of the delta variant on the US economy may be less than initially feared. The monthly non-farm payrolls report for August is slated for release early Sept. 3.

WTI hit a session high of $70.61/b, marking the first time the front-month contract has crossed above $70/b intraday since Aug. 6.

"There is a broad risk-on feel on Wall Street that is sending the dollar lower as people buy up risky assets," OANDA senior market analyst Ed Moya said. "There is some optimism following this morning's data that we are continuing to see progress in the labor market ... markets are pretty optimistic that we are going to go ahead and see a resumption of the reopening trade globally and [oil markets] will remain in deficit."

The ICE US Dollar Index fell to 92.229 in afternoon trading, down from a Sept. 1 close of 92.449 and on pace to close at the weakest since Aug. 5.

Ida remnants shut East Coast terminals

Meanwhile the market was still seeing impacts from Hurricane Ida, which made landfall as a Category 4 storm on the Louisiana coast Aug. 29. Remnants of the storm brought heavy rain to the northeast overnight into Sept. 2, forcing several refined product terminals to close due to flooding, market sources said. NuStar plans to restart operations Sept. 2 at its New York Harbor refined products terminal following the restoration of power there, a spokesperson said.

According to market sources, Phillip 66's New Jersey terminals -- Linden and Tremley Point -- were also shuttered by Ida.

A spokesperson for Phillips 66 was unable to provide an immediate comment on the terminals.

The ICE New York Harbor RBOB crack versus Brent climbed to $14.94/b in afternoon trading, up from a Sept. 1 close of $14.58/b.

USGC refinery slowdown supports gasoline prices

The bulk of Louisiana's refinery capacity remains offline as grid operators struggle to restore service to the southeast portion of the state, supporting regional gasoline prices. The Platts USGC unleaded 87 premium to NYMEX RBOB eased to 7 cents/gal Sept. 2, down from an Aug. 30 high of plus 10.50 cents/gal, but still well above pre-storm levels of around minus 5 cents/gal.

More than 2 million b/d of oil refining capacity was shuttered ahead of Ida, and only ExxonMobil's 500,000 b/d Baton Rouge Refinery is restarting thus far. Late Sept. 2 President Joe Biden authorized the release of strategic petroleum reserve crude to the plant in a bid to keep the refinery supplied even as the bulk of offshore production remains shuttered following the storm.