By Myra P. Saefong and William Watts
Oil futures climbed Wednesday, with U.S. prices settling back above $80 a barrel to their highest finish in nearly a week, after Hurricane Ian forced temporary production cuts in the Gulf of Mexico.
Natural-gas futures shook off early losses to follow oil higher, even as the storm was expected to lead to power outages, and lower demand for the energy source.
West Texas Intermediate crude for November delivery /zigman2/quotes/211629951/delayed CL.1 +1.05% /zigman2/quotes/209723049/delayed CL00 +1.05% rose $3.65, or nearly 4.7%, to settle at $82.15 a barrel on the New York Mercantile Exchange. That was the highest finish for a front-month contract since Sept. 22, FactSet data show.
November Brent crude , the global benchmark, was up $3.05, or 3.5%, at $89.32 a barrel on ICE Futures Europe. December Brent , the most actively traded contract, rose $3.18, or nearly 3.8%, to $88.05 a barrel.
Back on Nymex, October gasoline rose 3.4% to $2.5779 a gallon, while October heating oil rose 5.8% to $3.4494 a gallon.
October natural gas rose 3.3% to $6.868 per million British thermal units on the contract’s expiration day. The new front-month November contract settled at $6.955, up 2.9%.
Hurricane Ian strengthened rapidly into a Category 4 storm that was expected to make landfall on Florida’s Gulf Coast Wednesday. The Bureau of Safety and Environmental Enforcement reported Wednesday that in response to the storm, 9.12% of oil production and 5.95% of natural-gas output in the Gulf has been shut in.
That was, however, lower than shut ins of 11% of Gulf oil output and 8.56% of natural-gas output on Tuesday .
Oil slumped to eight-month lows earlier this week. A persistently strong U.S. dollar, with the currency index /zigman2/quotes/210598269/delayed DXY +0.50% trading at a 20-year high, has been a weight on crude and other commodities priced in the unit, making them more expensive to users of other currencies.
Bullish analysts, however, have argued that supplies remain tight and that prices could rebound on significant supply concerns.
Attention is turning toward next week’s meeting of the Organization of the Petroleum Exporting Countries and its allies, which earlier this month agreed to cut output by 100,000 barrels a day for the month of October, reversing an increase of that amount in September.
“We have to acknowledge the dominant trend is still lower for the oil market right now but we do continue to look for the market to stabilize soon as we do not believe the combination of overcompliance by OPEC+, tight global physical markets, and the geopolitical uncertainty surrounding the war in Ukraine can be solely offset by concerns about the global economy,” wrote analysts at Sevens Report Research, in a note.
European and U.K. benchmark natural-gas prices jumped after Kremlin-run Gazprom warned that the remaining gas route to Europe, via Ukraine, is now at risk of being shut off . Damage to the Nord Stream natural-gas pipelines that run from Russia to Europe have also rattled the market.
Benchmark Dutch front-month futures rose 10% to €205 per megawatt hour on Wednesday. U.K. gas futures for October rose nearly 26% to £321.67 per megawatt hour.