New York — Energy prices settled higher Oct. 27 as US Gulf of Mexico operators shut in crude production ahead of Hurricane Zeta, tightening supply outlooks.
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NYMEX December WTI settled $1.01 higher at $39.57/b and ICE December Brent climbed 74 cents to $41.20/b.
Roughly half of all the oil and gas production from the US Gulf of Mexico was shut in Oct. 27 ahead of Hurricane Zeta, which is expected to make landfall in southeastern Louisiana.
An estimated 914,811 b/d of crude production and 1,500 MMcf/d of natural gas production was shut in, reflecting 49.45% and 55.35% of US Gulf output, respectively, according to the US Bureau of Safety and Environmental Enforcement. About 25% of the Gulf's platforms and rigs, or 157 facilities, have been evacuated thus far, BSEE said, with more underway.
Chevron, Shell, BP, BHP, Murphy Oil and Equinor all confirmed they've shut down platforms and production ahead of the storm. BP and Chevron count among those shutting in all of their operated platforms.
NYMEX November RBOB settled 3.18 cents higher at $1.1434/gal and November ULSD was up 3.559 cents at $1.1577/gal.
"Crude prices are rallying as Hurricane Zeta triggers further disruptions to crude output in the Gulf of Mexico," OANDA senior market analyst Edward Moya said in a note. "Risk aversion took a break today and that gave oil a chance to stabilize a bit before the lower boundaries of its two-month trading range."
Zeta, which weakened to a Tropical Storm after making landfall on Mexico's Yucatan Peninsula Oct. 26, was expected to regain hurricane status later on Oct. 27 and make a second landfall late Oct. 28 near southeastern Louisiana, according to the National Hurricane Center.
The current path of the hurricane targets roughly 2.7 million b/d of refining capacity, mostly in Louisiana.
Refiners continue to monitor the storm, based on their hurricane readiness and response plans. Decisions to slow or shut down plant depending on the intensity, location and timing of landfall of the storm are likely to be made within the next 24 hours, sources familiar with operations at several refineries said.
The Platts USGC unleaded 87 gasoline front-month crack against WTI climbed to $6.504/b, up 48 cents from the session prior and the strongest since Oct. 14. The USGC ULSD crack against WTI jumped 51 cents to a 12-session high $7.088/b.
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