Brent Crude hits $87.50 amid Hurricane Beryl, but gains may be short-lived

Brent crude climbed to $87.50 a barrel on July 4 for the first time since mid-April, holding firm as a slew of upbeat news supported crude prices in early July. The increase was driven by oil supply threats from Hurricane Beryl and an upbeat oil inventory report from the EIA.

Reports indicated that Hurricane Beryl was disrupting US oil production, prompting companies such as Shell, BP and Exxon Mobil to evacuate rigs in the Gulf of Mexico. The National Hurricane Center and the Bureau of Ocean Energy Management estimate that about 73,000 barrels per day of federal offshore oil production are in the storm’s projected path. However, Bloomberg reported Thursday that major rigs including Exxon Mobil Corp.’s Hoover, Occidental Petroleum Corp.’s Boomvang. and Shell Plc’s Perdido, are now out of the storm’s path and may not face significant production cuts.

On Wednesday, weather reports predicted the Category 5 hurricane would hit the Texas Gulf Coast with significant strength. However, experts said Thursday that they believe the hurricane will weaken as it passes the Yucatan Peninsula. According to ICIS, Beryl is expected to “weaken further and reach Tamaulipas and the US state of Texas as a much less destructive storm and not a cause for concern for industrial assets in those regions.”

Amid rising crude prices, Saudi Aramco released its PSOs for August loadings on Thursday. According to Reuters, Aramco cut the price of the flagship Arab Light crude it will sell in Asia in August to $1.80 a barrel above the Oman/Dubai average. Saudi oil major also raised the official selling price of Arab Light to US markets by $0.10/bbl to $4.85/bbl above the benchmark. The lower premium for Arab Light crude to Asia reflects the reality of a more competitive market, with non-OPEC producers encroaching on market share held by Middle Eastern producers.

By Tom Kool for Oilprice.com

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