Business

WTI Prices climbs due climate changing

WTI prices have climbed above the $60 per barrel level as tropical storm Barry swirls in the Gulf of Mexico. The National Oceanic Atmospheric Administration predicts the storm will turn into a hurricane. The current sustained winds are 50-miles per hour short of the 70-miles per hour that would categorize the storm as a hurricane. The slow movement of the storm and the heavy rains are expected to batter the Louisiana coast. Approximately 55% of the oil production in the Gulf of Mexico is now shut in waiting for the storm to pass. Imports have declined, according to the most recent reports from the US Department of Energy.

Crude oil prices have hit an inflection point and the length of time that production is closed in will drive the price of oil. As inventories begin to fall as gasoline demand rises, crude prices could continue to see upward pressure. Other products that could be effected by robust commodity trading include gasoline and heating oil, as well as energy shares.

Production is Forecast to Rise

The Energy Information Administration reports that global oil inventories will increase by 0.1 million barrels per day in both 2019 and 2020. Rising global oil inventories largely reflect an increasingly weak outlook for global oil demand in 2019. EIA forecasts global oil demand will rise by 1.1 million barrels per day in 2019, 0.2 million barrel per day less than forecast in the most recent short-term energy forecast.

EIA estimates that US crude oil production averaged 11.0 million barrels per day in 2018, up 1.6 million barrels per day from 2017, achieving a record high for total production. EIA forecasts US crude oil production will average 12.4 million per day in 2019 and 13.3 million per day in 2020.

Imports Have Declined Pushing Down in Stockpiles

The EIA also recently reported that crude oil imports averaged 7.3 million barrels per day, down by 284,000 barrels per day from the prior period. Over the past month crude oil imports averaged about 7.3 million barrels per day, 12.3% less than the same month last year.

The Department of Energy reported that crude oil inventories decreased by 9.5 million barrels from the previous week. This was higher than expected. The EIA also said that crude oil inventories are now about 4% above the five-year average for this time of year. Gasoline inventories decreased by 1.5 million barrels last week and are at the five-year average for this time of year. Distillate fuel inventories increased by 3.7 million barrels last week and are about 5% below the five-year average for this time of year. Total commercial petroleum inventories decreased last week by 3.8 million barrels last week.

Hurricanes Disrupt Production

Tropical Storm Barry is heading toward the Louisiana coast. Parts of New Orleans have already flooded. The slow-moving storm is expected make landfall early Saturday. The Mississippi River is expected to crest close to 20 feet, and evacuations are beginning. About 10 to 15 inches of rain was predicted to fall starting during the weekend.