Crude oil prices fell yesterday after Hurricane Laura crashed into Louisiana as a category 4 storm, but later weakened to a tropical depression. The storm was still one of the worst in U.S. history and the trail of destruction left 6 people dead, whilst businesses and homes were damaged. Up to a million people were left without power in Lousiana and Texas.
Oil prices have dipped because the storm largely missed the Lone Star State, and its vast oil infrastructure. Texas had seen large parts of its production shut down over fears of flooding and employee safety concerns.
Earlier closures of Houston Port, Beaumont, and Port Arthur were expected to reduce crude exports by almost 1 million barrels per day. These shutdowns should filter through to crude oil stocks at a later date, but analysts are also considering the effects of “demand destruction” from consumers and businesses using less fuel.
Today also sees U.S. inflation figures in the form of the Core CPE number. Analysts are expecting a rise to 1.2% from last month’s 0.9%. The figures will get more attention than usual after Federal Reserve Chairman Jerome Powell underlined the bank’s commitment to a 2% inflation target over the long-term in his speech at Jackson Hole. A higher number in the PCE could spark a rally in commodities such as oil.
Inflation fears have been a key factor in the commodities rally since late-July as investors fear runaway inflation from the rise in central bank balance sheets.
Crude Oil Technical Outlook
A strong close on Tuesday looked like it was setting the crude oil price up for further gains with the $44.00 handle the near-term target. Price has since fallen to a lowe of $42.39. The key levels of support are $42.20 and $41.50 and if buyers emerge then the uptrend can continue. The $41.50 level would align with the uptrend line into Monday and this would be the key level for oil to remain in a bullish tone.