Oil prices steady as 'double trouble' storms bear down on Gulf of Mexico

SINGAPORE: Crude oil prices remained steady on Monday as storms closed in on the Gulf of Mexico, shutting more than half the region’s oil production, although prices were capped by ongoing concerns about fuel demand being sapped by coronavirus lockdowns.

Brent futures slipped 2 cents, or 0.1%, to $44.33 a barrel by 0316 GMT, while U.S. West Texas Intermediate crude was down 2 cents, or 0.1%, to $42.32 a barrel. Both benchmark contracts had risen early on Monday.

On Sunday, Hurricane Marco and Tropical Storm Laura tore through the Caribbean and Gulf of Mexico, forcing energy companies to pull workers from offshore platforms and shut down oil output.

Producers had shut 58% of the Gulf’s offshore oil output and 45% of natural gas supply on Sunday. The region accounts for 17% of total U.S. oil production and 5% of U.S. natural gas output.

“Crude prices rose as double trouble in the Atlantic could lead to huge disruptions with oil operations in the Gulf of Mexico,” said Edward Moya, senior market analyst at OANDA in New York.

“Oil’s gains, however, are likely to be muted as virus uncertainty continues to weigh on the crude demand outlook.”

The global death toll from the coronavirus surpassed 800,000 on Saturday, according to a Reuters tally, with the United States, Brazil and India leading the rise in fatalities.

Also capping the potential for price rises, the U.S. oil and natural rig count increased this week for the first time since March, with energy firms adding the most oil rigs in seven months, as shale producers start drilling again.

Still, adding to support for prices was a report by members of the Organization of the Petroleum Exporting Countries (OPEC) and other oil powers, including Russia, that countries in the OPEC+ group that pumped above supply targets from May to July will need to slash output by over a million barrels per day for two months to compensate.