Quick Take: Oil Enters Hurricane Season
With inventory drawdowns coming in with a larger-than-expected result, Harry, who only expected a small drawdown, said that this only strengthens the bullish case for oil.
Although the crude oil market was looking weak, it hasn't been able to put in new lows, he said. Because of this, coupled with bullish outlooks on both technical and fundamental perspectives, crude oil should go higher.
Another factor: Hurricane season could have a more profound effect than usual on the price of crude, Harry added. The rationale is simple: With today's larger-than-expected inventory drawdown, we have less oil in our reserves. Should a hurricane force the shutdown of oil production, supply will also diminish.
While lower supply would typically result in higher prices anyway, the lower inventory will only exacerbate the dwindling supply. Thus, Harry concluded, crude oil will go higher should a hurricane take production offline.
-- Written by Bret Kenwell in Petoskey, Mich.