(Bloomberg) -- Oil edged lower in Asian trading as one of two storm fronts menacing the U.S. Gulf of Mexico was downgraded, reducing the risk of a prolonged disruption to crude production in the region.
Futures in New York traded around $42.50 a barrel after rising 0.7% on Monday. Tropical storm Marco faded with safety warnings dropped, although Laura is set to become a hurricane before making landfall Thursday. Some 82% of oil output in the Gulf has been halted as operators brace for the weather system to hit.
Refinery closures from companies including Motiva Enterprises LLC and Valero Energy Corp (NYSE:VLO). could potentially shut in more than 1 million barrels a day of capacity before the storm threat passes. U.S. gasoline futures rose to the highest since before the pandemic on concern over possible fuel shortages.
The hurricane could have ramifications for global energy flows -- diverting gasoline from Europe to the U.S. for example -- and has translated into higher premiums for crudes from the affected region. The impacts are likely to be fleeting, however, with the coronavirus and how fast global oil production returns to remain the key price drivers for the foreseeable future.
Prospects for an imminent end to Libya’s civil war and a resumption of oil exports dimmed, meanwhile, after forces loyal to eastern commander Khalifa Haftar scoffed at the United Nations-backed government’s announcement of a cease-fire.
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