Louise Dickson:
The rise of oil prices is continuing beyond what even most bullish traders would dream just months ago, and Brent hurtling towards the threshold of $80 per barrel is reflective of the extraordinarily tight crude market.
However, upward space for price maneuvering could just as easily be extinguished, either as investors opt for profit taking or, in the longer term, as a lethargic economic recovery brings commodity prices back down to a more humble perch.
For now, US supply constraints will continue to provide upside to oil prices, as Ida-related outages will still affect US supply in the first quarter of 2022.
Hurricane Sam, though currently forecasted to be less intense than previous storms this season, could still make landfall on the US East Coast in the middle of this week.
While Hurricane Sam will not likely cause colossal damage at upstream and downstream facilities, a powerful storm on the East Coast could trigger power shortages and blackouts at a time when natural gas prices are already stretched to maximums, and add to the energy crisis fears that lift up not only oil and gas futures, but propane, gasoil, and fuel oil.
Some upside supply support will come from Kazakhstan, with the Tengiz oil field coming back online, restoring about 130,000 bpd of outages over the course of September 2021.
Russia, should it decide to increase gas production, could also see some slight increases in lease condensate, which would also create slight downward pressure on oil prices.
China will continue to be in the spotlight this week, especially as teapot refineries may see output fall as power shortages force lower utilization.
Across Asia as a whole, if we continue to see very high LNG prices, we can expect sufficient additional barrels of oil demand from the continent in the near term.
