WASHINGTON (DTN) -- Nearby-delivery-month crude oil and refined product futures on the New York Mercantile Exchange and Brent crude on the Intercontinental Exchange again rallied Tuesday, with spot-month West Texas Intermediate futures at a fresh five-month high. The gains came as drillers in the U.S. Gulf of Mexico suspended most of their offshore operations and refiners shutter plants along the Louisiana and Texas coasts in anticipation of Hurricane Laura. The storm is forecast to strengthen into Category 4 before making a landfall on Thursday, Aug. 27.
U.S. producers slashed 84.3% or 1.6 million barrels per day (bpd) of GOM oil production, up slightly from 82.5% the day prior, according to Bureau of Safety and Environmental Enforcement data released Tuesday afternoon. The agency also reported that offshore natural gas production has been cut by 61% from a reported 57% on Monday. Laura was upgraded to a hurricane Tuesday, with sustained winds of 65 knots and likely to strengthen further over the next 24-48 hours as it turns toward the Texas-Louisiana border. DTN Weather reports the system is now over the open waters of the U.S. Gulf Coast with favorable conditions to rapidly intensify, indicating a potential for Laura to reach category 4 intensity.
The storm's track remains somewhat uncertain but should track between Galveston and the Louisiana border for the landfall, opening up about 4.6 million bpd of refining capacity for the Laura's landfall. Motiva Enterprises and Valero Energy Corp. among others have announced closures of their refineries along the Louisiana and Texas costs.
Tuesday afternoon, traders also positioned ahead of the weekly release of U.S. inventory data, with market consensus calling for crude oil stocks to have declined for a fifth straight week. Commercial crude stockpiles likely decreased by about 6.9 million barrels (bbl) in the week ended Aug. 21, while gasoline stocks likely dropped by about 2 million bbl. Distillate inventories are expected to have declined by 1.2 million bbl from the previous week. The American Petroleum Institute will release its data at 4:30 p.m. EDT, followed by official statistics from the U.S. Energy Information on Wednesday at 10:30 a.m. EDT.
NYMEX WTI October futures surged 73 cents to settle at a fresh five-month high of $43.35 per bbl, and the spot-month international benchmark Brent crude rallied 73 cents to a $45.86-per-bbl settlement. ULSD September futures added 1.25 cents to $1.2601 gallon settlement, and the front-month RBOB September contract surged 2.88 cents to a six-month spot high settlement at $1.3959 per gallon.
In other markets, U.S. equities came off intra-day highs to end the session mixed, with the Dow Jones Industrial finishing 56 points lower and the S&P500 up 0.35%. ExxonMobil will end its 92-year run on DJI by the end of the month in what some analysts called a marker of the decline of the oil company amid the pandemic that crushed demand for the commodity. Exxon was the longest of any company currently listed on DJI, having joined the Dow in 1928 under the name Standard Oil of New Jersey.
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