Futures Movers: U.S. oil benchmark shifts lower as Atlantic storms threaten energy demand

Futures Movers: U.S. oil benchmark shifts lower as Atlantic storms threaten energy demand


Markets/commodities reporter

Deputy markets editor

U.S. benchmark crude prices turned lower Monday on growing concerns that storms churning in the Atlantic will hurt energy demand on the U.S. East Coast.

Global benchmark crude prices, however, continued to climb on expectations that renewed sanctions on Iran will tighten the world’s supply of oil.

October West Texas Intermediate crude CLV8, -0.30% the U.S. benchmark traded on the New York Mercantile Exchang, fell 23 cents, or 0.3%, to $67.52 a barrel, pulling back from an intraday high of $68.52.

November Brent crude LCOX8, +0.38% the global benchmark, gained 26 cents, or 0.3%, to $77.09 a barrel.

The market is showing concerns about Hurricane Florence in the Atlantic and its potential to weaken energy demand on the East Coast, said Phil Flynn, senior market analyst at Price Futures Group. The storm is expected to approach the coast of South Carolina and North Carolina on Thursday, according to the National Hurricane Center.

Flynn also pointed out other storms in the Atlantic, Isaac and Helene, and a possible tropical cyclone over the northwestern Caribbean Sea, that may not only cause demand destruction, but energy production and transportation issues as well.

In product markets, October gasoline RBV8, -0.46%  fell 0.3% to $1.964 a gallon, while October heating oil HOV8, -0.06%  shed less than 0.05% to $2.218 a gallon.

The “only” real threat from Hurricane Florence is to demand, if it shuts down highways, but that would have a temporary effect, said James Williams, energy economist at WTRG Economics.

Concerns over the potential for weaker energy demand as a result of global trade tensions had contributed to last week’s negative performance, analysts said. The U.S. benchmark on Friday logged a 2.9% weekly loss, after two consecutive weekly gains. The weekly decline was the largest since July, according to Dow Jones Market data. November Brent saw a 1% weekly decline.

For the year to date, WTI remains up about 13%, while Brent has rallied roughly 16%.

“Investors are continuing to play a cautious game with the markets as it continues to be in a volatile,” said Mihir Kapadia, chief executive officer and founder of Sun Global Investments, in a daily note. “We do not expect things to settle down until the dust has settled on sanctions and the global trade dispute between the U.S. and the majority of global economic powers cools down.”

Meanwhile, continued signs of a decline in Iranian crude oil exports ahead of renewed U.S. sanctions taking effect in November continue to underpin the crude market, wrote analysts at Oanda.

Read: 3 ways Iran could respond to sanctions and what it means for oil prices

U.S. Energy Secretary Rick Perry was set to meet with counterparts from Saudi Arabia and Russia, starting Monday, ahead of the oil sanctions on Iran, according to Reuters, citing sources familiar with the matter.

Perry is “starting to realize just how tight the oil market is going to be when the Iranian sanctions kick in,” said Price Futures Group’s Flynn.

Analysts also tied support for oil to data from Baker Hughes on Friday that showed the number of U.S. oil rigs fell by two last week, suggesting a modest slowdown in production.

In other energy dealings Monday, natural-gas prices looked set to recoups some of last week’s 4.8% decline, which was the largest weekly loss since February.

October natural gas NGV18, +1.08%  added 0.9% to $2.80 per million British thermal units.

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