Oil Prices - Sept 6

[dan_s]

The strongest hurricane ever recorded in the Atlantic is promising catastrophic destruction for everything in its path. Hurricane Irma’s impact on financial and commodity markets could be far reaching and we offer prayers for everyone who is in harm’s way. To add to the oil market worries, we now have Tropical Storm Katia that has formed in the Gulf of Mexico which will impact some Mexican oil production (no threat to Texas). A much smaller storm and close to land with maximum sustained winds at 40 MPH. The storm is moving east/southeast at 2 miles per hour.

Read: https://www.investing.com/analysis/the- ... -200211747

Keep in mind that historically oil and gas price swings caused by tropical storm activity have been short-lived. Assuming OPEC sticks with their plan, the global market is still short oil by about 1.5 million barrels per day. I am eager to see the next IEA "Oil Market Report" that will be published next week.

EIA's weekly oil supply report, which will be more inaccurate that usual, will come out tomorrow morning. Don't put much weight on the next few reports from EIA. Hurricane Harvey has the information that EIA gets from Texas and Louisiana totally screwed up. API data may be more accurate. No doubt the markets will react to these reports anyway.

Assuming the right hands knows what the left hand is doing at the Department of Energy, which EIA is part of, they must be looking into why their U.S. oil production estimates were so far off from actuals for April, May and June. The largest overstatement was in June.

The U.S. Dollar Index closed at 92.21 today. It has been on a fairly steady decline since early July. See: https://www.investing.com/quotes/us-dollar-index
Oil trades in U.S. dollars, so as the dollar declines oil prices go up.

Brent oil closed at $54.20/bbl. The premium to WTI has widened. Time for WTI to catch up?