Anadarko Petroleum shuts-in GOM production as storm approaches

By Ellen Milligan and Tsuyoshi Inajima on 9/4/2018

LONDON and TOKYO (Bloomberg) -- Oil traded near $71/bbl in New York as Tropical Storm Gordon forces evacuations at fields along the U.S. Gulf Coast and threatens supply.

Futures rose as much as 2.3% from Friday, skipping Monday because of the U.S. Labor Day holiday. Anadarko Petroleum stopped production and removed all personnel from two Gulf of Mexico platforms as Gordon neared the mouth of the Mississippi River. The risk to supply pushed up prices despite data showing rising OPEC output.

A hurricane warning has been posted for the Gulf Coast from eastern Louisiana to the Florida-Alabama state line, raising concerns that work at more oil installations may be disrupted. The region produces about 17% of U.S. crude, according to the Energy Information Administration, while onshore plants account for about 45% of the country’s refining capacity.

“The U.S. hurricane season has been very quiet so far, but as we approach the annual peak it may attract increased attention and, with that, some underlying support for crude oil,” said Ole Sloth Hansen, head of commodity strategy at Saxo Bank.

West Texas Intermediate for October delivery rose as much as $1.60 to $71.40/bbl on the New York Mercantile Exchange. Monday trades will be booked Tuesday because of the U.S. holiday. Average volume traded Tuesday was more than double the 100-day average.

Brent for November settlement advanced $1.24 to $79.39/bbl on the ICE Futures Europe exchange, after climbing $0.51 on Monday. The global benchmark crude traded at an $8.58 premium to WTI for the same month.

Iran Sanctions

Oil has rebounded about 9% from the lows of August as buyers of Iranian crude start to shun shipments from the Persian Gulf nation even before renewed U.S. sanctions take full effect in November. India is said to be mulling a 50% cut in purchases, while shipments to South Korea plunged 40% in July and Europe’s imports have dropped by 45% since May.

“As sanctions directly targeting Iranian oil will be imposed on Nov. 4, increasing worries of disruptions to global crude supply are allegedly affecting the crude price as well,” Global Risk Management wrote in a research note.

Traders are closely watching for signs the Organization of Petroleum Exporting Countries and its allies will fill any potential deficit. OPEC produced 32.74 MMbpd last month, an increase of 420,000 bpd from July, according to a Bloomberg News survey of analysts, oil companies and ship-tracking data. Russia maintained output near a post-Soviet record.

Oil Market News

With Tropical Storm Gordon expected to grow into a hurricane before coming ashore early Wednesday, the Louisiana Offshore Oil Port said it’s watching the storm closely, but there are currently no disruptions. Exxon Mobil said a blockade of its Nigerian facilities may affect oil output. Kazakhstan’s crude and condensate production sank in August as maintenance work at key fields hit flows, government data compiled by Bloomberg show. BNP Paribas SA trimmed its 2018 Brent and WTI forecast by $4/bbl each to $68 and $74 respectively as it expects the dollar “to remain stronger for longer”, analyst Harry Tchilinguirian said in a report.

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