Hurricane Ida, a category 4 tropical storm, made a landfall on the northern coast of the Gulf of Mexico over the weekend. Power outages were reported across New Orleans today as well as numerous floodings in Louisiana. According to Platts report, over 90% of crude oil and natural gas production facilities in the impacted area have been shut down. Such a big disruption in supply has exerted upward pressure on oil prices. Crude launched a new week higher, near 1-month lows. However, as the time passed gains started to be erased and Brent, as well as WTI, moved below Friday's closing prices. A pullback can be justified with reports saying that while over 90% of Gulf oil production has been shut down, less than half of refining capacity has been turned offline.
Taking a look at OIL.WTI from a technical point of view, we can see that the price tested the resistance zone at 50% retracement of the downward move launched in early-July ($69.50 area). Bulls failed to break above this hurdle and a pullback started. Near-term support to watch it case it deepens can be found at the 38.2% retracement ($67.50 area). On the other hand, if bulls regain control and manage to push the price above the aforementioned 50% retracement, a move towards the $71.00 area may be on the cards. The upper limit of market geometry as well as 61.8% retracement can be found in this area.
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Source: xStation5
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