Oil prices have been rangebound for the last four weeks with demand concerns being canceled out by expectations of an OPEC+ production cut extension.

Oil prices have been trading rangebound for the fourth consecutive week, staying within the $81-83 per barrel range for Brent, as priced-in expectations of OPEC+ maintaining production curbs have failed to lift sentiment any higher. While improving consumption figures from the US and an increasingly bullish picture for hurricanes in the US Gulf Coast provide some medium-term hope for oil bulls, the macro outlook is still weak and the prospect of Fed interest rate cuts in June is getting slimmer.

The latest forecast from the US National Oceanic and Atmospheric Administration (NOAA) confirmed that this year’s Atlantic hurricane season is expected to be above normal, with the potential for 17 to 25 named storms from June to November.

With 8 to 13 of those storms likely to develop into hurricanes, almost double the past year’s average, 2024 might see heightened risks for production from the US Gulf of Mexico and refineries across the Gulf Coast.

Offshore oil fields in the US Gulf of Mexico account for 15% of total crude production in the country (1.8 million b/d) and the overwhelming majority of medium sour supply, while for natural gas the same metric stands at 5%.

The concentration of US refining along the Texas and Louisiana Gulf Coast is even stronger, corresponding to almost half of US downstream capacity, while the same strip accounts for 90% of all US seaborne crude exports. 

/OilPrice/