Oil Mixed As Traders Hope That New Anti-Virus Measures Will Have Limited Impact On Demand

Oil Video 22.09.20.

Tropical Storm Beta Did Not Turn Into A Hurricane

This hurricane season is very intense, and oil production in the U.S. Gulf of Mexico has been already hit by Hurricane Laura and Hurricane Sally.

This time, some platforms were evacuated due to Tropical Storm Beta. However, the loss of production is estimated at about 150,000 barrels per day (bpd) which is much less than in the case of the recent hurricanes.

Beta did not gain enough strength to become a hurricane and made landfall in Texas. The constant disruption from hurricanes and tropical storms may put some near-term pressure on U.S. oil production and push crude inventories to lower levels.

Today, traders will have a chance to evaluate API Crude Oil Stock Change report which is expected to show that crude inventories declined by 2.25 million barrels. If the report indicates a bigger decline, oil will have a decent chance to get back above the $40 level.

UK Announces New Anti-Coronavirus Measures But Oil Remains Mostly Flat

Global markets are closely monitoring the situation in Europe which is suffering from the second wave of coronavirus.

The UK government has been the most active in discussing the potential new measures in recent days. Finally, UK Prime Minister Boris Johnson announced that bars and restaurants will have to close early and encouraged people to work from home if possible. He also strengthened mask-wearing rules.

According to Johnson, these measures are expected to stay in place for six months, and the UK government does not rule out introduction of much stronger measures if the situation gets worse.

UK is seen as a potential example of what may soon happen in other European countries so oil traders were happy to hear that UK did not impose a new lockdown, at least for now.

At the same time, the realization of additional virus containment measures will likely put some pressure on the economy and increase consumer anxiety which may be bad for oil demand recovery.

In my opinion, fears about the second wave of lockdowns will not disappear in the upcoming days because the situation is developing fast and the traditional flu season has not yet begun. If the virus situation gets worse, oil may have a very challenging fourth quarter.

For a look at all of today’s economic events, check out our economic calendar.

This article was originally posted on FX Empire

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