Crude oil prices will be driven this week by the pace of post-hurricane recovery on the Gulf Coast and a potential selloff in equities, market watchers said.
President Donald Trump and his challenger, former Vice President Joe Biden, spent the weekend politicking over the violence in the country. After clashes between Trump supporters and those rallying for racial equality turned deadly, Trump blamed the Portland Mayor Ted Wheeler, while Biden blamed the president himself.
“We must not become a country at war with ourselves,” Biden added.
For Bill Barnes, the director of consultancy at Pisgah Partners Ltd., the political climate in the United States could influence stock and commodity markets this week.
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“I’d be keeping a very close eye on the equity markets over the next few weeks,” he said from Vermont. “If for any reason – U.S. election, violence in the US streets, COVID, dollar weakness – we get a meltdown, or the beginning of one, the selloff will be very widespread.”
The price for Brent crude oil, the global benchmark, finished up 1.5 percent to close trading for the week ending Aug. 28 at $45.05. Hurricane Laura last week shut down US oil production in the Gulf of Mexico and idled several refineries. As of Sunday, the U.S. government estimated that about 70 percent of Gulf oil production and 50 percent of natural gas production was still offline.
Tamas Varga, an analyst at oil broker PVM in London, said Laura will show up in US data Wednesday as a 1.45 million barrel per day drop in crude oil production. Other factors influencing he price of oil this week include the strength of the dollar, which has an inverse relationship to the price of oil. The dollar has weakened as the Federal Reserve has signaled that it will hold interest rates near zero for some time, helping to support crude prices.
Oil prices also will be affected by the outlook for the economy. The next snapshot comes Friday when the Labor Department reports unemployment and employment for August on Friday. Economists expect the jobs recovery to slow to about 1.4 million from 1.8 million in July.
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Paul Hickin, associate director for oil at S&P Global Platts, said from London that the OPEC production survey for August will influence the direction of oil prices this week, as well the amount of oil stored offshore, which is indicative of the level of oversupply.
“Oil watchers have almost forgotten about floating storage now that the trend has been downwards, but it is still an important indicator,” he said.
Daniel J. Graeber is a veteran energy correspondent and founder of The GERM Report, a survey of the intersection between energy and foreign affairs.
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Hurricane recovery, politics to drive oil prices this week - Houston Chronicle
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