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Market News While "Nicholas" could not support oil prices, Europe was in deep energy crisis!

While "Nicholas" could not support oil prices, Europe was in deep energy crisis!

As the impact of Hurricane Nicholas on oil prices fades, the European energy crisis is expected to continue to bring new support to oil prices.

2021-09-17
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On Thursday (September 16), U.S. crude oil closed the cross star, and the gains were suspended after hitting a six-week high on the previous trading day. The threat of Hurricane Nicholas to crude oil production in the U.S. Gulf of Mexico subsided, but the European energy crisis is expected to continue to provide momentum to oil prices .


"Nicholas" is difficult to support rising oil prices


Hurricane Nicholas first made landfall in southern Texas early on Tuesday morning with winds of 75 miles per hour. As the storm weakened into a tropical depression, the panhandles of Louisiana, Mississippi, Alabama and Florida Some areas are also affected.

The National Weather Service's Weather Forecast Center said Nicholas was located near Marsh Island off the central coast of Louisiana with winds of 25 miles per hour and became a tropical cyclone on Thursday morning.

The Forecast Center stated that Nicholas is expected to slowly move north in the next few days.

CNN meteorologist Michael Gay said that Nicholas will slowly drift north into southern Arkansas in the next 48 hours and dissipate on Saturday morning.

Since Hurricane Ida landed on the Gulf Coast of Louisiana on August 29, production in the area has been slow to recover, which has tightened the recent supply and provided support for crude oil. However, Nicholas caused almost no damage to the drilling platform or infrastructure.

Nishant Bhushan, an oil market analyst at Rystad Energy, said that since Nicholas did not interrupt US production further, it is difficult to see how oil prices will rise further in the near future. The global supply has encountered another surprise again.

As of Thursday, two and a half weeks have passed since Hurricane Ida hit, and about 28% of U.S. Gulf of Mexico crude oil production is still closed.

Commonwealth Bank of Australia (CBA) commodity analyst Vivek Dhar said: "The time required for production to recover is still longer than people think. This has always been a supporting factor for the market."

Europe's energy crisis intensifies


European natural gas prices have risen ridiculously. Due to concerns about the impact of spillovers, Asian LNG traders said that they are currently paying the highest price for the same period in history.

The supply crisis has caused natural gas prices in many places in Europe to continue to "high fever". Since the beginning of this year, natural gas prices in Europe have risen by more than 280%. Recently, they have shown an accelerated rise and have provided support for oil prices.

With the weather getting colder and global energy shortages, the competition for fuel is unlikely to end anytime soon. Global price increases are expected to run through the winter in the northern hemisphere, boosting inflation and putting the already fragile economic recovery at risk.

Hansen, Head of Commodity Strategy at Saxo Bank of Denmark, said that the crisis in Europe is still continuing. Europe does not produce its own natural gas in large quantities, so it relies on imports from Russia, Norway and through LNG.

Warren Patterson, head of commodity strategy at ING, said the broad recovery in demand and the decline in local production mean that European natural gas inventories are well below average.

He mentioned that as winter in the northern hemisphere approaches, heating fuel needs are greater, but European natural gas reserves only reach 71%, which is lower than the 5-year average of 86% reserves. This will be the lowest reserve level in at least 10 years after the winter.
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