WASHINGTON (DTN) -- Nearby delivery month oil futures on the New York Mercantile Exchange and Brent crude on the Intercontinental Exchange moved mixed in early trade Monday, with the RBOB October contract advancing overnight as traders watch for the impact of Tropical Storm Sally forecasted to strengthen into a Category 2 hurricane when it makes landfall in southeast Louisiana and the Mississippi coastline overnight and following the return of Libya's crude exports after opposition forces led by General Khalifa Haftar committed to ending an eight-month long blockade of oil facilities.
In early trading, October West Texas Intermediate futures edged slightly lower to trade near $37.20 per barrel (bbl), holding above last week's three-month spot low $36.13 bbl. The Brent November contract traded little changed just below $40 bbl at $39.73 bbl. NYMEX ULSD October futures were flat at $1.0915 gallon and the front-month RBOB contract gained 1.75 cents to $1.1124 gallon.
Tropical Storm Sally is now expected to become the second major hurricane of the 2020 Atlantic Basin hurricane season, carrying winds of 100 miles per hour when it reaches the southeast coastline of Louisiana early Tuesday, prompting evacuations from offshore oil production rigs in the Gulf of Mexico. Phillips 66 is reported to have closed its 255,600 barrels per day (bpd) Alliance refinery in Louisiana, ahead of the storm, which is forecast to pass just west of the refinery. The disruptions come just three weeks after Hurricane Laura reached Category 4 strength with landfall concentrated in the Lake Charles region in Louisiana, forcing nearly 1.5 million bpd of crude output to be shut-in and more than a half dozen refineries to close.
Louisiana Governor John Bel Edwards on Saturday declared a state of emergency and the city of New Orleans ordered evacuations for residents outside the city's protective levees.
Internationally, Libya's opposition forces led by Haftar on Sunday pledged to end an eight-month long blockade of the country's oil facilities, potentially releasing up to 1.2 million bpd of additional crude oil into the markets as soon as this week. U.S. Embassy in Tripoli said in a statement, "Libyan National Army had conveyed the personal commitment of General Haftar to allow the full reopening of the energy sector no later than Sept. 12th."
The country's oil output has been reduced from over 1 million bpd to 106,000 bpd in August, prompting widespread electricity shortages and social unrest that seemed to have put pressure on warring parties to come to a consensus.
The recent development in Libya likely will be the focus of the upcoming OPEC+ Joint Ministerial Committee Meeting scheduled for Wednesday and Thursday. The 23-nation alliance is also expected to review quota compliance from laggard members that are now likely to be under further pressure to tighten pledges to their cuts. Earlier this month, reports suggested Iraq was seeking an exemption from the agreement starting in January 2021.
OPEC+ has brought around an extra million bpd in additional crude exports into the global market over the past two months, although loadings are still 4.5 million bpd less than their peak a year ago, according to estimates from the energy consultancy Kpler. From a demand perspective, global oil demand stalled in August after improving in June and July, with refined product demand also flattening out globally in August.
Liubov Georges can be reached at email@example.com
(c) Copyright 2020 DTN, LLC. All rights reserved.