Energy stocks outperformed the broader market Tuesday as U.S. crude oil prices rebounded a day after settling at their lowest since January, supported by a slowdown in oil production in the U.S. Gulf of Mexico ahead of Hurricane Ian and a slight softening in the U.S. dollar.
Hurricane Ian's projected path takes it east of most U.S. oil and gas production in the Gulf, but so far it has caused production shut-ins of 190K bbl/day of oil, or 11% of total Gulf of Mexico oil output, and 184M cf/day of gas, or 8.5% of overall GoM output.
The U.S. Gulf of Mexico produces ~15% of the country's crude oil and 5% of dry natural gas.
Oil's recent price drop has raised speculation that OPEC+ could intervene, and Russia reportedly is pushing for a production cut.
"Only a production cut by OPEC+ can break the negative momentum in the short run," UBS oil analysts Giovanni Staunovo and Wayne Gordon said.
Goldman Sachs cut its oil price forecast by $19/bbl on average for the period stretching from Q4 to next year's Q4.
"Even with a cautious growth outlook... the oil market remains critically tight, with still near-record low inventories and OPEC spare capacity and with supply soon set to turn supportive once again between the end of the U.S. [Strategic Petroleum Reserve] sale and the expected decline in Russian production later this year," Goldman said.
Meanwhile, front-month U.S. natural gas (NG1:COM) closed -3.6% to $6.65/MMBtu, the lowest closing price since July 14.
European authorities began investigations of mysterious leaks on two currently closed Russian natural gas pipelines to Germany, pushing European gas futures higher.