London — Brent was pricing just shy of the $80/b mark during European trade Wednesday morning, as crude oil prices held steady ahead of the expected landfall of Hurricane Florence, expectations of a draw in US crude inventories, and the upcoming reintroduction of sanctions against Iran.
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At 1154 GMT, the November ICE Brent crude futures contract was up 14 cents/b from Tuesday’s settle at $79.21/b, while the NYMEX October sweet light crude contract was up 61 cents/b at $69.86/b.
The immediate focus in oil markets Wednesday was on the potential supply disruptions of Hurricane Florence, which is due to make landfall on the US East Coast late Thursday or early Friday morning, according to the US National Hurricane Center.
Although no US offshore or onshore oil production facilities or oil refineries are currently in the path of the Category 4 storm, the Northeast is heavily dependent on the Colonial Pipeline and Plantation Pipeline for refined products supplies, both of which run through the Carolinas, where the storm is expected to pass.
Elsewhere, reports of a larger-than-expected draw-down in US crude inventories by the American Petroleum Institute were also helping to keep prices at high levels.
The API reported US crude stocks for the week ended September 7 were down 8.636 million barrels, while analysts surveyed Monday by S&P Global Platts were looking for stocks to have declined by 2.7 million barrels for the same period.
Market participants will be waiting for firmer figures from the Energy Information Administration, due for release later today.
Finally, price action in the oil markets continued to take its cues from geopolitics amid concerns of a drop in Iranian crude supply ahead of the reintroduction of US sanctions.
According to Ole Hansen, of Saxo Bank, however, the various bullish factors converging on the market will face a psychological barrier as prices near $80/b.
“Pricewise, we are coming close to $80/b, which for Brent crude is a psychology level where we have found resistance before, a break above that level may spur some momentum buying.”
At 1156 GMT, the US Dollar Index was up 0.07 at 95.17.
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–Edited by Maurice Geller, email@example.com