October crude oil prices traded higher during the overnight and early morning hours, supported by a rebound in risk-taking sentiment and supply disruption concerns from Tropical Storm Isaac. US regulators indicate that 78% of Gulf of Mexico crude production has been shut in, which represents about 24% of total US output. Some traders indicated that the latest refinery closures could end up pulling demand for crude oil in the near term. There are also concerns that even with Isaac expected to increase to Category 1 hurricane status today; it might not be powerful enough to significantly damage Gulf of Mexico operations. Comments from the IEA earlier this morning seemed to downplay a potential SPR release, suggesting that recent prices increases did not justify a reserve release.
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