Later today at 14:30 GMT, the Weekly Petroleum Status Report from the US Energy Information Administration is expected to show another weekly drop in US crude oil and gasoline stocks. The report will not include the impact of Hurricane Ida which is estimated to have temporarily closed down around 95%, or 1.7 million barrels/day, of offshore crude output and a 1 million barrels/day reduction in refinery demand due to shutdowns, power outages and flooding. With this in mind, the market reaction to the report is likely to be muted given the distortions that will occur during the coming weeks.
During the third quarter we have been looking for the price of Brent crude oil to pivot around $70, a level which most OPEC+ producers can accept as being not to cold, hurting revenues, and not to hot meaning it will not promote accelerated non-OPEC production growth. Confirmation of the OPEC+ production increase together with fading impact of the recent disruptions in Mexico and the US Gulf coast should ensure the price continues to trade rangebound over during the coming months, before potentially moving towards $80 and beyond in the unlikely event demand exceeds OPEC+ and other producers ability to provide the barrels needed to balance the market.