Oil sinks as Irma imperils demand in gas-thirsty Florida

By Jessica Summers on 9/8/2017

NEW YORK (Bloomberg) -- Oil pared its first weekly gain since July as Hurricane Irma threatened to slash energy demand that had only just begun to recover from the wrath of Harvey.

Futures slipped as much as 2.1% in New York, paring the gain for the week to 1.9%. While Valero Energy Corp. and other refiners resumed fuel production after Harvey roared ashore two weeks ago, demand for gasoline and other transportation fuels may falter across much of the southeastern U.S. if Florida and neighboring states take a direct hit from Irma. Florida burns more gasoline than any other state except California and Texas.

Uncertainty has traders “pulling in their horns ahead of the storm,” Phil Flynn, senior market analyst at Price Futures Group Inc. in Chicago, said by telephone. “They are worried about demand destruction.”

The most recent data from the Energy Information Administration showed last week’s rise in U.S. crude stockpiles was the largest since March. Meanwhile, deliveries of foreign crude to the Gulf Coast fell to the lowest in records going back to 1990 as Harvey’s wind and rain shut every major port in the region.

“People are thinking we’ve had the worst of the refinery outages and that’s behind us,” Michael Lynch, president of Strategic Energy & Economic Research Inc. in Winchester, Massachusetts, said by telephone. “The refineries will be starting up and absorbing more crude.”

West Texas Intermediate for October delivery declined 93 cents to $48.16/bbl at 11:24 a.m. on the New York Mercantile Exchange. Total volume traded was about 13% above the 100-day average. Prices lost 7 cents to close at $49.09 on Thursday.

Brent for November settlement fell 42 cents to $54.07/bbl on the London-based ICE Futures Europe exchange. Prices gained 29 cents to $54.49 on Thursday and are 3.7% higher this week. The global benchmark traded at a premium of $5.36 to November WTI.

The market also “seems to be a little technically heavy,” Flynn said. “When you don’t know how exactly the fundamentals are going to play out, the computers are just going to play the charts.”

Related News ///


Comments ///

comments powered by Disqus