Hurricane Beryl strengthened overnight to a powerful Category 5 storm as it churned in the Caribbean Sea. The Cat. 5 storm is the earliest on record in the Atlantic hurricane season and has caused concern among energy traders about potential Gulf Coast disruptions.
On Monday morning, Beryl made landfall on Grenada’s Carriacou Island in the Caribbean Sea with winds around 150 mph. According to NOAA data dating back to 1851, this is the strongest known storm to traverse the Grenadines area.
Beryl’s arrival marks an early start to what some meteorologists had said would be an active hurricane season. The storm’s intensity has spooked energy traders, sending West Texas Intermediate (occasionally called Texas Light Sweet) to two-month highs on Monday.
Bloomberg noted, “Oil futures rose Tuesday, trading at their highest since late April, with gains tied to expectations for heavy travel around the Independence Day holiday and concerns that powerful Hurricane Beryl could later cause disruptions to offshore crude production in the Gulf of Mexico.”
Senior analyst Ipek Ozkardeskaya from Swissquote Bank, in a note to clients, emphasized that while Beryl may not immediately impact operations in the Gulf of Mexico, it could potentially cause disruptions later in the week.
Computer models show the storm making landfall on or around Mexico’s Yucatan Peninsula around Friday morning and possibly curving north towards the US Gulf Coast afterward.
A combination of tensions in the Middle East, robust demand ahead of July 4, a big short squeeze, and a rapid start to the Atlantic hurricane season are some factors driving WTI higher, up 10% since April 26.
As we predicted on June 6, an active Atlantic hurricane season with storms like Beryl could potentially disrupt major US Gulf Coast refineries. This disruption could drive prices at the gas pump to the politically sensitive $4-a-gallon level for the Biden administration ahead of the presidential elections this fall.
Queue up more SPR dumps…
Tyler Durden
Tue, 07/02/2024 – 08:50
