Oil and Gasoline Futures Feel Impact of Hurricane Ida

Energy markets turned on Monday as investors responded to the immediate disruption from Hurricane Ida, while simultaneously trying to gauge the economic cost of increased US hospitalizations caused by the coronavirus.

Gasoline futures rose 2 percent after gaining more than 4 percent when trading began. West Texas Intermediate oil, the United States benchmark, also rose at first, but then fell into negative territory and fell 0.8 percent Monday morning.

Before Hurricane Ida made landfall in Louisiana on Sunday, oil and gas companies shut down more than 90 percent of production in the Gulf of Mexico, making this storm the first of the year to significantly disrupt these industries.

Workers were evacuated Companies that have shut down facilities from about half of the region’s staffed production platforms included BP, Chevron, Phillips and Shell, federal officials said on Saturday.

The outage could affect gasoline prices in the region ahead of Labor Day, traditionally one of the year’s high demand peaks.

“It is a bit speculative to say what will happen, but it will be an event,” said Tom Kloza, head of global energy analysis at Oil Price Information Service. “This could lead to a small price increase.”

Analysts at ING said the timing of the oil industry’s recovery from the storm could affect prices.

“The big question is which will yield faster returns – offshore oil production or refining capacity?” analysts said in a note. “If it is old, we may start to see an increase in crude oil inventories that could put pressure on prices”.

Oil prices slowly recovered From the depths of the pandemic as economies around the world reopen from lockdowns and energy demand soars. But the rise in coronavirus cases caused by the highly contagious Delta variant has threatened an already shaky recovery, and halting oil production in the Gulf of Mexico could further hinder recovery.

NS daily average More than 100,000 are now hospitalized for Covid-19 patients in the United States, a level not seen since last winter before most Americans were vaccinated. NS European union Member states on Monday are expected to recommend reintroducing travel restrictions to Americans wishing to travel to Europe.

Energy companies in Southern Louisiana are preparing for major cuts. Cleco and Entergy, two major providers in the New Orleans metro area, said they expected widespread flooding and called in thousands of additional workers and contractors. Entergy warned that customers in the hardest-hit areas “could experience weeks of power outages.”