WASHINGTON (DTN) -- Nearby delivery oil futures on the New York Mercantile Exchange and Brent crude on the Intercontinental Exchange moved sharply higher in afternoon trade as traders monitored a rapidly intensifying Hurricane Delta that is forecast to make its landfall along the Louisiana-Texas coastline this week, prompting some producers in the Gulf of Mexico to shut-in offshore production platforms and evacuate personnel.
Delta is expected to strengthen into a major Category 4 hurricane before making landfall along the U.S. Gulf Coast, with sustained winds of 115 knots (132 mph). DTN Weather forecasts Hurricane Delta has the potential to intensify into a Category 5 storm should the current trend continue.
U.S. Bureau of Safety and Environmental Enforcement said Tuesday Hurricane Delta forced the closure of 29.2% of offshore crude oil production capacity in the U.S.-regulated northern Gulf of Mexico. Royal Dutch Shell announced Tuesday it would evacuate all nonessential workers from nine of its offshore Gulf of Mexico operations and prepare to shut production. Equinor ASA and BHP Group Ltd also shut in production and evacuated workers from platforms, the companies said.
Separately, traders will also keep a close eye on weekly inventory data from the American Petroleum Institute due out 4:30 p.m. EDT, which would be followed by official figures from the U.S. Energy Information Administration at 10:30 a.m. EDT Wednesday. Commercial crude oil inventories are projected to have fallen by 100,000 barrels (bbl) on average in the week ended Oct. 2., and refinery runs expected to decrease by around 1%. Analysts estimate a 1.7 million bbl draw in gasoline stocks, with distillate inventories projected to have decreased by 2.2 million bbl last week.
In financial markets, stocks on Wall Street slumped and the U.S. dollar index strengthened after President Donald J. Trump instructed White House officials to halt negotiations on further coronavirus stimulus with House Democrats.
Trump tweeted, "I have instructed my representatives to stop negotiating until after the election when, immediately after I win, we will pass a major Stimulus Bill that focuses on hardworking Americans and Small Business."
In an immediate reaction to the tweet, Dow Jones Industrials plunged more than 400 points and the S&P 500 Index fell 1.13%.
Earlier Tuesday, Federal Reserve Chairman Jerome Powell warned during his speech to the National Association for Business Economics that economic recovery would be weak without additional fiscal support from the federal government.
"The recovery will be stronger and move faster if monetary policy and fiscal policy continue to work side by side to provide support to the economy until it is clearly out of the woods," Powell added.
On the session, November West Texas Intermediate futures rallied $1.45 to settle at $40.67 bbl, and the December Brent contract advanced $1.36 to $42.65 bbl. November ULSD futures surged 5.53 cents or 4% to $1.1886 gallon and November RBOB futures extended 4.1 cents higher to settle at $1.2351 gallon.
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