By Myra P. Saefong and William Watts
Oil futures climbed on Tuesday, with prices finding support a day after settling at their lowest price since January, as Hurricane Ian leads to the slowdown of crude production in the Gulf of Mexico.
West Texas Intermediate crude for November delivery /zigman2/quotes/211629951/delayed CL.1 +0.94% /zigman2/quotes/209723049/delayed CL00 +0.94% rose $1.79, or 2.3%, to settle at $78.50 a barrel on the New York Mercantile Exchange. WTI on Monday posted the lowest finish for a front-month contract since Jan. 3.
November Brent crude , the global benchmark, was up $2.21, or 2.6%, at $86.27 a barrel on ICE Futures Europe. The most active December Brent contract rose $2.01, or 2.4%, to $84.87 a barrel.
Back on Nymex, October gasoline rose 4.6% to $2.4931 a gallon, while October heating oil was up 4.2% at $3.2599 a gallon.
October natural gas fell nearly 3.7% to settle at $6.651 per million British thermal units.
Hurricane Ian strengthened, lashing the western tip of Cuba, as it proceeded on a path that could see it make landfall on Florida’s western coast . Chevron Corp. /zigman2/quotes/205871374/composite CVX +0.59% and BP PLC /zigman2/quotes/202286639/delayed UK:BP -1.28% /zigman2/quotes/207305210/composite BP +0.06% on Monday said they had s hut in production at some Gulf of Mexico platforms as they braced for the hurricane .
On Tuesday, the Bureau of Safety and Environmental Enforcement reported that in response to the storm, 11% of oil production, and 8.56% of natural-gas production, in the Gulf have been shut in.
Natural-gas prices, however, appeared unfazed by the shut ins, though some analysts raised worries about weaker power demand due to expected storm-related outages.
Oil prices found some support, as the ICE U.S. Dollar Index /zigman2/quotes/210598269/delayed DXY +0.22% , a measure of the currency against a basket of six major rivals, was little changed, after hitting a 20-year high on Monday.
The dollar’s surge versus major rivals has taken a toll on commodities, stocks and other assets. The dollar’s rally comes as investors fear aggressive monetary tightening by the Federal Reserve and other major central banks will lead to a sharp global slowdown in economic growth that will crimp demand for crude oil.
Meanwhile, the recent oil selloff could prompt the Organization of the Petroleum Exporting Countries and its allies, known as OPEC+, to curb output when they hold their monthly meeting on Oct. 5, analysts said.
“The group will likely be getting uneasy with the degree of weakness that we have seen in the market and so there is the very real possibility that we see OPEC+ announce supply cuts in order to support the market,” said Warren Patterson, head of commodities strategy at ING, in a note.
“Clearly though, if we are to see cuts, they will need to be quite a bit larger than the 100,000 barrels a day agreed at the last meeting in order to have a meaningful impact on the market,” he said.
Still, overall, “oil remains a sellers’ market with worries about a global recession and high interest rates intensifying,” said Fawad Razaqzada, market analyst at City Index and FOREX.com, in a market update.
On Wednesday, the Energy Information Administration will release its weekly U.S. petroleum supply report.
On average, analysts polled by S&P Global Commodity Insights expect the report to show that U.S. commercial crude supplies rose 400,000 barrels for the week ended Sept. 23. They also forecast inventory declines of 100,000 barrels each for gasoline and distillates.