How Hurricanes Affect Oil & Gas Prices - The Supply Side 
The United States still leads the world in oil production, accounting for 20% of worldwide oil production in 2020 with about 15% coming from offshore oil rigs which are inherently vulnerable to hurricanes and tropical storms. As the 2021 hurricane season continues to ramp up, this poses an imminent threat to U.S. oil production capabilities.

The NOAA’s most recent update for the 2021 Atlantic hurricane season forecasts a 65% chance that we will have an “above normal” hurricane season. NOAA administrator Rick Spinrad, Ph.D., recently said, “After a record-setting start, the 2021 Atlantic hurricane season does not show any signs of relenting as it enters the peak months ahead.” This may mean U.S. oil production could see disruptions from August through November and possibly increased volatility.

On the demand side of the equation, efforts to get back to a fully reopened economy have stumbled a bit with concerns over the spread of the Covid Delta Variant. Politicians and health officials are currently debating lockdowns and vaccine mandates in response to an uptick in COVID-19 cases. If a wave of new lockdowns were to take effect, we could see major aftershocks in the price of oil. Since the U.S. is the No. 1 consumer worldwide, slowing demand may cause prices to drop and oil refiners to adjust accordingly.

For those looking to make a bullish play, there is the Daily S&P Oil & Gas Exp. & Prod. Bull 2X Shares (NYSE:GUSH) and for those looking to profit from a bearish move in oil production the Daily S&P Oil & Gas Exp. & Prod. Bear 2X Shares (NYSE:DRIP) are ones to keep an eye on. Both are based on the S&P Oil & Gas Exploration & Production Select Industry Index which is simply a list of 54 oil producers who are based in the U.S. This gives the trader using them exposure to the country’s oil producers as a whole, making it an easier way to take advantage of sector volatility.

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