Your Daily Energy Report for September 16, 2024
Posted on 2024-09-16
Crude Oil
Crude Oil futures for October settled up $1.44 or 2.098% at $70.09. Oil prices increased on Monday due to the ongoing impact of Hurricane Francine, which has disrupted output in the U.S. Gulf of Mexico. This disruption has outweighed persistent concerns about Chinese demand ahead of the upcoming U.S. Federal Reserve interest rate decision. According to the BSEE, more than 12% of crude production and 16% of natural gas output in the Gulf of Mexico remained offline following the hurricane. Traders are increasingly anticipating a 50 basis points (bps)rate cut from the Federal Reserve, rather than the previously expected 25 bps, according to the CME FedWatch tool. Lower interest rates typically reduce borrowing costs, potentially stimulating economic activity and increasing oil demand. Weaker economic data from China over the weekend has subdued market sentiment, with concerns over prolonged slower growth in the world's second-largest economy reinforcing uncertainties about oil demand.
Natural Gas
Natural Gas futures for October settled up $.068 or 2.95% at $2.373. Natural gas prices climbed on Monday, due to reduced production levels and increased LNG feedgas deliveries following the impact of Hurricane Francine. Analysts attribute this rise partly to below-average inventory increases. Looking ahead, potential challenges include upcoming maintenance at Cove Point LNG and the imminent launch of the Matterhorn pipeline, aimed at transporting gas from the Permian Basin to Houston. EBW also notes that higher natural gas prices might discourage power plants from switching from coal to gas. According to the Bureau of Safety and Environmental Enforcement, offshore production has been gradually recovering post-storm, though approximately 298 million cubic feet per day remained offline as of Monday.