Crude oil prices were 0.74% higher in the European trading session as storms moved in on the Gulf of Mexico, shutting more than half of its oil production.
Hurricane Marco and Tropical Storm Laura ripped through the Caribbean and Gulf of Mexico region, forcing oil companies to evacuate workers from offshore platforms and shut down oil output.
Crude oil has found repeated support at the $41.50 level and is eyeing resistance at the $44.00 price, which provided support in late-February. As with other commodities, the price of oil has been supported by a weakening U.S. dollar and traders will be watching the Federal Reserve’s annual Jackson Hole economic symposium event for clues about the central bank’s future policies.
U.S. oil inventories have been declining steadily from the record 2.1 billion barrels set in early July. Total stocks of crude and products fell last week, marking the fifth decline in six weeks, according to a release from the U.S. Energy Information Administration (EIA). This trend should continue with production shut down in the Gulf.
The near-term price activity in crude oil will likely be driven by the effects of Federal Reserve comments on the U.S. dollar, however we should also keep a close eye on virus cases as we approach the winter months. President Trump boosted stocks by seeking to fast-track vaccines and treatment, which may help to remove the need for further lockdowns.
