Crude Oil Rallies Above $70 as Another Hurricane Menaces Texas

(Bloomberg) — Oil rose for a third day as another hurricane menaced a key U.S. energy hub just weeks after Ida hammered local output.

Crude futures gained 0.6% in New York after closing at the highest since early August on Monday. The latest system, Nicholas, made landfall in Texas, posing a threat to coastal refineries and petrochemical facilities.

Global oil supplies fell by 540,000 barrels a day in August amid unexpected disruptions and will be flat this month, according to the International Energy Agency. The world will have to wait until October for extra supply as output losses from Ida wipe out increases from OPEC+, the IEA said in a report.

In an indication of the tightening market, global inventories that ballooned during the pandemic have shrunk back to the lowest level in 20 months. About 2.97 billion barrels of crude were stored at onshore facilities as of Sept. 5, the least since January 2020, according to data analytics firm Kayrros.

“Oil outages continue to remain, with another tropical storm on its way,” said Keshav Lohiya, chief executive officer of Oilytics. “Short-term bullishness continues to remain the focus for oil markets.”

There are also signs of a stronger physical market, with Chinese companies buying grades from Brazil and Russia at higher premiums than a month earlier. The purchases come amid speculation that authorities are about to allocate more import quotas.

Extreme weather is also hitting Asia. All operations at China’s Zhoushan and Ningbo ports remained shut as of Tuesday morning after Typhoon Chanthu. The two locations are home to major refineries and oil-storage facilities.

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