The past week seems to bring the biggest increases in oil contracts among popular financial instruments. The price of a barrel of WTI rose by more than 11 percent on a weekly basis, which may be due to the upcoming hurricane.
Hurricane Delta led to a 92 percent drop in oil production from the Gulf of Mexico on Thursday, with a combined total of 45 percent of U.S. oil processing capacity and 51 percent of U.S. gas processing capacity in this region. It is therefore a very important share, which may influence the prices of both commodities.
In response to the possibility of an intensification of the hurricane in the Gulf of Mexico and gusts of wind blowing at a speed of nearly 200 km/h, oil companies started to close down the oil rigs and start evacuating their employees. According to information services, oil producers have withdrawn workers from nearly 300 offshore facilities. Thus, oil production dropped by a total of 1.69 million barrels a day and natural gas by 1.67 billion cubic feet a day, representing more than 60 percent of gas production, Reuters agency said. The companies evacuating their employees to land include Total SA, Royal Dutch Shell, BP and Chevron.
The price of this natural gas, whose production before the autumn-winter season has decreased in the USA, has increased this week by more than 9 percent, and it is the second of the strongest growing popular commodities in recent days.
Meanwhile, the passing week may also be successful for stock exchange bulls. The S&P 500 index seems to have risen by almost 3.4 percent and the DJIA and Nasdaq 100 by slightly more than 3 percent. The German DAX has so far gained 2.9 percent in relation to the previous week. It seems that this is due to increasing expectations of Joe Biden winning the US presidential election. Investors maycan expect less political chaos than under Donald Trump and a larger fiscal package from Democrats than Republicans.
On the currency market, in turn, as the price of oil rises, the Canadian dollar seems to gain most. In the week, the CAD strengthened to the USD by more than 1 percent, followed by the Swiss franc with a profit of just over 0.7 percent, and the third most popular currency was the euro with a strengthening of over 0.6 percent against the USD.
Daniel Kostecki, Chief Analyst Conotoxia Ltd.
Materials, analysis and opinions contained, referenced or provided herein are intended solely for informational and educational purposes. Personal opinion of the author does not represent and should not be constructed as a statement or an investment advice made by Conotoxia Ltd. All indiscriminate reliance on illustrative or informational materials may lead to losses. Past performance is not a reliable indicator of future results.
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