By Jake Lloyd-Smith, Bloomberg Markets Live Commentator and Reporter
The most consequential event for the oil market this week may come on Tuesday, but not from the battlefields of Ukraine or a high-profile analyst talking the talk.
With WTI more than 40% higher YTD on the fallout from the invasion, rising demand, and tight product markets, another bullish risk comes to the fore: Atlantic hurricane season looms and the National Oceanic and Atmospheric Administration is set to issue its initial outlook.
It could be a difficult few months, with scope for interruptions to offshore supply, as well as to refinery operations. President Joe Biden -- who’s already ordered a vast SPR crude release as oil prices rallied -- has warned “another tough hurricane season” awaits with storms that’ll be more intense.
Officially, the hurricane season starts on June 1, beginning at almost the same time as the US summer driving season, which will elevate gasoline and diesel demand.
[ZH: As if right on cue, the National Hurricane Center has spotted a pre-season tropical disturbance in the Gulf of Mexico already. NHC said the system is located over the north-central Gulf of Mexico and has a very low chance of strengthening into a named tropical storm. It is expected to move inland over the central Gulf coast early this week. ]
Stockpiles of both key fuels are low and falling, with prices rallying to records.
Given all the risks, it’s unlikely those prices have yet topped out.