Here comes that rainy day feeling again. It always seems to be a Monday. It seems the US oil and gas industry just got back to normal after Hurricane Francine only to get back into storm preparation mode.
Shell is getting ready to shut Gulf of Mexico platforms. Fox Weather reports that, “Millions of people living on the Gulf Coast from Florida to Louisiana are being urged to make sure preparations are in place as Invest 97L continues to become better organized and will likely become Tropical Storm or Hurricane Helene in the coming days as the system enters the Gulf of Mexico.”
The storm comes just after the Gulf of Mexico started to get back to normal but already we’re seeing natural gas prices getting ready to break out on the upside as concerns about a shutdown in production finally takes its toll on inventory. Oil prices are also getting a bit of support not only from the weather but increasing your political risks quest data from overseas. It shows that the European economy is struggling just a bit and with the Fed in a rate cutting cycle, the downside for oil should be limited.
Overnight data from the eurozone showed that their purchasing manager flash index (PMI) came in at a weaker than expected 50.5. The expectation was for the PMI to come in at 52.3 so it is a big miss. Also the manufacturing index also missed, coming in at 44.8 versus an expectation of 45.7. In the UK things weren’t much better. The UK composite PMI flash Actual 52.9 (Forecast 53.5, Previous 53.8) the UK Manufacturing PMI Flash Actual 51.5 (Forecast 52.2, Previous 52.5) this should increase the odds of the EU and the UK easing rates in the future.
India has upped its crude imports as production has fallen. Oil Price reports that, “India’s crude oil production in August fell by 3.4% on the year to 2.4 million metric tons, equal to some 17.6 million barrels. Fuel production was also down, more modestly, the Economic Times reported. As a result of the decline in domestic production, crude oil imports to India jumped by 6.4% in August, driving a 3.3% increase in oil imports over the period between April and August, as the country’s economy continues expanding.
The geopolitical risk factors continue to reverberate. Israel’s defense minister reportedly said, ”we are deepening attacks in Lebanon the Israeli public will have to show composure in the coming days.” Politico reported that “Israel is ramping up its assault on Lebanon, the defense minister said Monday, as the Israeli military conducted a new wave of airstrikes on Hezbollah targets. “We are intensifying our strikes in Lebanon; this series of actions will continue until we achieve our goals, bringing the residents of the north back to their homes safely,” Israeli Defense Minister Yoav Gallant said, according to local media. Israel deployed dozens of fighter jets and hit 150 targets in Lebanon, the Israel Defense Forces (IDF) said Monday. The latest round of strikes came hours after Hezbollah — an Iran-backed militant group and political party based in Lebanon — launched dozens of rockets Sunday at an Israeli military base in the northern region of the country.
The Israeli tactic to use pagers as a weapon against Hezbollah has other Israeli foes looking at the way that they use technology. Reportedly the Iranian Revolutionary Guard is being warned by the government to get rid of any pagers and cell phones that may have been compromised by Israel.
The storm should keep the supply side very tight. Cushing, OK supplies are running near tank bottoms and the draw on other Gulf Coast supplies could lead to big supply withdrawals in the coming weeks.
Natural gas production in the Gulf took a big hit after the last storm. If it happens again and we lose production, it might give this market a decent rally as some producers have started to cut back output for economic reasons. You should download the Fox Weather ap to stay on top of this storm.