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Hurricane Delta Shuts Down 29% Of Gulf Oil Production

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EDITOR NOTE: The energy sector has been reeling since before the COVID-19 pandemic, burdened by oversupply, softening demand, low prices, high debt (particularly in the fracking industry), and poor earnings performance. Now, Hurricane Delta has forced the closure of 29% of all Gulf oil production. Typically, such an event would see a surge in energy-related investment, from crude oil to the companies producing and refining it. Also, the fact that energy remains the worst performing sector and one most likely to see longer-term rise, according to CFRA projections, may make it an attractive bet. But given our pandemic situation, and how it will likely have changed our driving habits, and given the rise in electric vehicle production, will demand in this sector ever recover to its former levels of robustness?

In preparation for Hurricane Delta, which intensified into a major Category 4 storm on Tuesday, offshore energy operators in the Gulf of Mexico have evacuated 56 production platforms, or 8.7% of the 643 manned platforms in the Gulf, according to the Bureau of Safety and Environmental Enforcement. The bureau estimated that 29.2% of Gulf oil production and nearly 8.6% of natural-gas output was shut in as of Tuesday afternoon. In electronic trading, November West Texas Intermediate crude CLX20, -1.65% traded at $40.16 a barrel, down a bit from the Nymex settlement at $40.67.

Originally posted on MarketWatch

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