The price of crude oil recorded a slight fall on
Monday, perhaps at the news that the Hurricane Ida, which had been battering
the US Gulf Coast on Sunday, has finally been downgraded to a tropical storm.
Although the strong winds can still cause mayhem,
the impact on the ordinary lives appears to be gradually receding.
It is true that the major oil companies moved their
staff away from the facilities as the tropical storm evolved into a category-4
hurricane and the production suffered to some extent.
Sensing a major disruption to the crude oil supply,
the markets reacted in an understandable way – elevating the price. As the
feared destruction did not take place, however, the price of crude oil just
fell in the early hours on Monday morning.
As of 11:30 GMT, the price of WTI and Brent were $68.29
and $72.53, recording a loss of 0.76% and 0.30% respectively. It was a modest
fall, though.
Facing the new development in the aftermath of the
Hurricane Ida, analysts are eagerly awaiting the US crude oil inventory data this
week, both by the API, American Petroleum Institute, and EIA, US Energy
Information Administration, in order to gauge the trend in the consumption in
the US, the world’s largest consumer.
As the threat of the tropical storm subsides, the
worries over the spread of the Delta variant shows no sign of abating, not just
in the US, but across the globe. In proportion to the rising infection levels,
the tendency to secure borders has gone up by a few notches.
The European Union yesterday, for instance, added
the US, along with Israel, from where visitors are not allowed to enter the member
nations – a move that will not go down very well among the political circles in
the US.
Both the US and Israel had an impressive track record
in rolling out vaccines, yet the moves could not keep the outbreaks at bay.
The OPEC+, meanwhile, maintains an apparent united
positon with regard to the increased production; it will not go down from 400,000
bpd, started in August, they say.
As for the US request for a production hike, the
group has been vague; they haven’t put it into the dustbin of history either.
Since the US still is a major player in the oil
realm, both as a producer and a consumer, OPEC+ has chosen to react cautiously to
the request by the US.
By asking the OPEC+ to increase the production while
discouraging the domestic producers to do the same with a few knee-jerk moves,
the Biden administration has come under criticism from many quarters, including
those who supported his election because of the green agenda.
The rise in price at the pumps, however, left the
administration with no alternative other than doing the obvious – increasing the
supply to address the demand.
Since there is no sign of collapsing the price of
crude oil at present with the feared supply-glut, both producers and consumers
must agree upon a formula to keep it at a sustainable level without disrupting the
fragile recovery of the global economy.
