WASHINGTON (DTN) -- After a two-session sell-off triggered by concerns over global recession, Brent crude and West Texas Intermediate futures advanced early Tuesday amid a sharp pullback in the U.S. Dollar Index as investors positioned ahead of the release of fresh U.S. economic data, including durable goods orders and the consumer confidence index, while Hurricane Ian, now over Cuba, is forecast to reenter the eastern Gulf of Mexico, with its current path expected to disrupt at least some oil operations in offshore Gulf waters.
Chevron and British Petroleum said Monday they would move oil workers to safety and halt production at some offshore oil platforms as Hurricane Ian is expected to make landfall on the coast of Florida late Wednesday. DTN WeatherOps forecasts that once Ian enters the eastern Gulf, it is forecasted to strengthen further to a peak strength of around 120 knots. Wire services indicated Chevron would close two platforms with combined production capacity of around 120,000 barrels per day (bpd), while BP will close two platforms, each with a capacity of more than 100,000 bpd.
In foreign exchange markets, the U.S. dollar weakened 0.5% against a basket of foreign currencies to trade near 113.430, lending support for the U.S. crude benchmark. West Texas Intermediate November futures traded on the New York Mercantile Exchange advanced $1.07 barrel (bbl) to $77.79 bbl, reversing higher from Monday's $76.42 nine-month low on the spot continuous chart. Brent, the international crude benchmark listed on the Intercontinental Exchange, gained $1.33 bbl to trade above $85 bbl. NYMEX RBOB October futures added 5.06 cents to $2.4348 gallon, and the front-month ULSD contract rallied 8.54 cents to $3.2145 gallon.
Tuesday morning, investors await the release of fresh U.S. economic data that is expected to show further softening of business conditions in August, with durable goods orders seen falling to a -0.4% following a -0.1% reading for July. Durable goods orders typically correlate closely with broader industrial activity and provide insight into supply chains for such industries as machinery, manufacturing, and transportation.
Also, the Conference Board will release its monthly report on U.S. consumer confidence for September on Tuesday morning that is expected to show confidence improved for a second consecutive month to 104.3 after falling to post-pandemic low mid-summer.
Internationally, the Organization for Economic Cooperation and Development lowered its economic growth projection for the reminder of the year and for 2023, citing debilitating effects of Russia's war in Ukraine on supply chains and inflation. In "Paying the Price of War" released Monday, OECD downgraded global GDP growth next year to 2.2% from 2.8% seen in the prior outlook, with inflation spreading faster and deeper than previously estimated. Inflationary pressures are now seen broadening beyond food and energy almost everywhere, with businesses throughout the global economy passing through higher costs for energy, transportation, and labor.
"A risk to the Outlook is that reductions in energy supplies from Russia to the European Union prove much more disruptive than assumed in the projections," warned OECD in its September report, adding that "taken together, these shocks could reduce growth in the European economies by over 1.25% in 2023, relative to baseline, and raise inflation by over 1.5%."
Liubov Georges can be reached at email@example.com