Canada’s economically dependent oil industry…
Oil prices climbed on Monday…
Oil and gas producers in the Gulf of Mexico are gearing back up on Monday after Tropical Storm Cristobal cleared the area.
Oil producers in the Gulf had shut in nearly 35% of all oil production in the area, or 650,000 barrels per day of production as of Sunday. But now, many are readying to bring workers back to shuttered facilities. Some companies who had evacuated workers and/or shut in production ahead of the storm last week were BP, Shell, Occidental, and more.
Cristobal had made landfall in Louisiana on Monday.
The Gulf of Mexico accounts for some 17 percent of U.S. oil production. In 2018, hurricane Michael shut in production of more than 700,000 bpd for a few days. In 2017, total oil industry—production and refining—hit US$200 billion, the highest storm bill in history.
The news that oil production is ramping back up in the United States after the storm is not welcomed news for the industry that was hoping for better oil prices as OPEC agreed to extend its current production quota levels through the end of July. Oil prices sank anyway, as the market appeared to be disappointed in the single-month extension, and in Saudi Arabia’s proclamation that the high voluntary production cuts that OPEC pulled off in May would not be part of the extension into July.
Oil prices had risen early on Monday, but both Brent and WTI quickly sank to trade nearly 3.5% down on the day by late afternoon. WTI was trading at $38.24 by 3:35pm EDT, while Brent was trading at $40.87 at that time.
It is unclear how quickly oil producers in the US Gulf of Mexico could bring all its production back online.
By Julianne Geiger for Oilprice.com
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Julianne Geiger is a veteran editor, writer and researcher for Oilprice.com, and a member of the Creative Professionals Networking Group.