By Ann Koh and Alex Longley
Laura made landfall early Thursday at Cameron, Louisiana, near the border with Texas, as a Category 4 storm and has started weakening. While it knocked out power to hundreds of thousands of people and has caused widespread damage, traders are waiting to assess the potential impact on both fuel production and consumption.
More than 80% of oil output in the Gulf of Mexico and almost 3 million barrels a day of refining capacity had been shut ahead of the storm, causing a spike in gasoline futures prices earlier this week. Since then prices have retreated, outpacing the decline in crude on Thursday.
“Gasoline has already given up most of its risk premium while WTI is at risk of breaking back below $43,” said Ole Hansen head of commodities research at Saxo Bank. “It’s incredible what a few miles can mean in terms of damage or no damage to key refinery assets.”
Laura has been disrupting energy flows, with trans-Atlantic gasoline tanker bookings jumping and more than 60 oil and refined product tankers in the western U.S. Gulf waiting for the storm to pass, according to ship-tracking data compiled by Bloomberg.
The hurricane is likely to have only a temporary market impact, with Covid-19 continuing to cloud the prospects for a more sustainable recovery in oil prices. There are indication of the weakness everywhere with Norway’s Equinor ASA the latest to announce job cuts. India’s annual fuel demand is expected to drop to a five-year low.
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