NYMEX Oil Futures Mixed as Gulf Braces for Hurricane Laura

WASHINGTON (DTN) --- Nearby delivery month crude oil futures on the New York Mercantile Exchange and Brent crude on the Intercontinental Exchange traded little changed in early hours Thursday while refined products extended losses despite Hurricane Laura, the first major hurricane of the 2020 Atlantic hurricane season, making a landfall along the Texas-Louisiana coast, shuttering much of the Gulf region oil and refining industry.

Near 7:00 a.m. ET, NYMEX October West Texas Intermediate crude oil futures traded 19 cents lower to $43.21 per barrel (bbl) while spot month RBOB futures dropped 2 cents to $1.3415 gallon and front-month ULSD futures declined 0.58 cents to $1.2389 gallon. ICE October Brent crude oil traded little changed at $45.60 bbl.

The U.S. Dollar Index, which tracks the greenback against a basket of global currencies, reversed higher in early morning hours after trading at one-week low 92.87 overnight, offering some support for WTI futures.

Crude futures held near five-month highs, surprisingly unmoved by the shuttering of almost all Gulf of Mexico crude production and several refineries and chemical plants. A larger-than-expected 4.7 million bbl drawdown from domestic crude-oil inventories as reported by the U.S. Energy Information Administration on Wednesday also had little impact on prices.

Laura is now tracking through western Louisiana as a Category 2 Hurricane with 110 mile per hour winds, with forecasters warning it could push a massive wall of water 40 miles inland from the sea.

Louisiana and Texas refineries and liquefied natural gas terminals were almost entirely shut down this week ahead of the storm's landfall.

While the idled production is close to that of Hurricane Katrina some 15 years ago, crude oil and refined product supplies are well above the five-year average while demand lags well below due to COVID-19 mitigation efforts.

EIA data reported US crude-oil inventories were drawdown for a fifth straight week as of Aug. 21, but at 507.8 million bbl stocks are still about 15% above the five-year average.

Total commercial petroleum inventories slid 7.8 million bbl last week, EIA reported, while total products supplied over the last four-week period averaged 18.5 million bpd down 14.6% from the same four-weeks in 2019.

In other markets, equity futures on Wall Street point to a lower open, while investors await a key speech from Federal Reserve Chairman Jerome Powell and weekly jobless claims due out at 8:30 a.m. ET. Powell's virtual speech to the Kansas City Fed's annual economic retreat, normally held in Jackson Hole, Wyoming, is slated for 9:10 a.m. ET, with market consensus calling for the Fed Chair to lay out a dovish near-term strategy that could include a looser interpretation of inflation targets.

Separately, China reported its industrial profits last month grew at the fastest pace since June 2018 at 19.6%, according to the National Bureau of Statistics data. China's industrial profits have been growing for a third straight month now, indicating its manufacturing sector slowly recovers from its coronavirus slump.

Liubov Georges can be reached at liubov.georges@dtn.com