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Crude oil futures fell Monday after Hurricane Beryl hit Texas and weakened to a tropical storm, with little apparent impact on refining activity and limited effects on offshore production.
But while Beryl is unlikely to cause significant interruptions in fuel supply, heavy rains and flooding in Houston and elsewhere in Texas could dent fuel demand, as travel is difficult.
“Hedges placed ahead of Beryl’s landfall were unwound due to crude oil facilities sustaining relatively little damage in affected areas,” Gelber and Associates said, as reported by Reuters.
“Much of today’s price decline looked like the unfolding of a classic buy the rumor/sell the news scenario,” Ritterbusch analysts said, referring to Beryl’s impact, according to Dow Jones.
Oil also is starting the week under downside price pressure prompted by optimism over a potential ceasefire in the Israel-Hamas war in Gaza, with negotiations seeing some progress, Ritterbusch said.
Oil bulls had “been emboldened by the threat of Hurricane Beryl amplifying U.S. supply risks,” but prices “may yet move higher as long as the seasonal rise in U.S. summertime demand can stay true to expectations,” Han Tan, chief market analyst at Exinity, told MarketWatch.
Front-month Nymex crude (CL1:COM) for August delivery finished -1% to $82.33/bbl, and front-month September Brent crude (CO1:COM) closed -0.9% to $85.75/bbl.
Meanwhile, Nymex front-month August natural gas (NG1:COM) ended +2% to $2.366/MMBtu, although Hurricane Beryl looks more bearish than bullish for gas, NatGasWeather.com said, as “the storm brought lighter demand through cooler temperatures and power outages, as well as weaker LNG exports.”
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Oil demand is expected to soften next year due a supply surplus driven by non-OPEC countries, BMI analysts said in a recent analysis, according to Dow Jones.
Production from non-OPEC countries excluding the U.S. is set to rise at an annual average rate of 858K bbl/day this year and 940K bbl/day next year, higher than any two-year period of growth seen since 2005, the research firm said.
“Growth is being fueled by conventional projects with long lead and payback times that are generally insensitive to short-run shifts in the oil price,” BMI wrote. “As such, absent project delays, these barrels will come online over the next 18 months, regardless of market conditions.”
BMI forecasts Brent crude will fall to $82/bbl next year, but said it is considering a downward revision to its estimates.