Brent Returns to $45 as Disruptive Storms Shutdown Production
By Adedapo Adesanya
The Brent crude returned to the $45 per barrel territory on Monday as storms headed for the Gulf of Mexico which shut more than half of the region’s offshore production, with the more dangerous of the two storms expected to strike later in the week.
The international benchmark rose 67 cents or 1.51 per cent to trade at $45.02 per barrel while the US West Texas Intermediate (WTI) crude gained 28 cents or 0.66 per cent to trade at $42.62 per barrel.
As the market faced rising supply, news of shutting oil production served as a piece of positive news to the market as news of disasters normally often helps prop up prices.
Energy companies shut more than one million barrels per day of offshore crude oil supply in the United State Gulf of Mexico and evacuated more than 100 production platforms because of the twin threat from Tropical Storms Marco and Laura.
Marco reached the coast Monday and Laura is expected to accelerate to a hurricane and hit by midweek, according to reports.
The storms could also curtail US exports and consequently boost Brent’s gains over that of the US crude on expectations that other countries might be able to boost exports while Gulf facilities are shut.
Reports that the United States is considering fast-tracking an experimental COVID-19 vaccine being developed by AstraZeneca and Oxford University supported oil prices yesterday.
AstraZeneca’s potential vaccine is being developed in partnership with the university, whose scientists began human trials in April. The team of scientists reported the vaccine produced a strong immune response in Phase I/II trial results in July.
The vaccine is now in large-scale Phase II/III trials, which includes a trial of 30,000 people in the US, a pediatric study and trials in low-to-middle income countries, such as Brazil and South Africa. The company said it did not expect efficacy results until later this year.
AstraZeneca then denied having discussed an emergency use authorization for its potential vaccine with the US government and called speculation of such use premature.
This is coming weeks after Russia became the first country to announce a coronavirus vaccine was ready, news that did not shake the market.
Also supporting prices was a report by members of the Organization of the Petroleum Exporting Countries (OPEC) and other oil-producing countries in the OPEC+ group which assured that members which pumped above supply targets from May to July will need to slash output by over a million barrels per day for two months to compensate.