Oil rallied and gasoline surged to a five-month high as energy companies suspended offshore operations and refiners shuttered Gulf Coast plants with Tropical Storm Laura expected to strengthen into a hurricane before making landfall later this week. Around 82% of oil production in the Gulf of Mexico was halted by around midday Monday, with refinery closures from companies including Motiva Enterprises LLC and Valero Energy Corp. potentially shutting in more than 1 million barrels a day of capacity. Gasoline futures rose to their strongest level since before the pandemic on concern over possible fuel shortages. Meanwhile, oil futures rose 0.7% in New York and 1.8% in London.
The storm comes as U.S. benchmark crude futures have risen this month amid a streak of declines in U.S. crude stockpiles and gasoline inventories. However, the pandemic is still raging across the world, threatening a sustained rebound in consumption.
“Signs of rising cases in Europe and Asia are still weighing on global demand expectations,” TD Securities commodity strategists including Bart Melek wrote in a note. “Weak refinery runs, exports and distillate demand continue to put a damper on the recovery.”
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