Oil steadies near $48 as U.S. refiners return after Irma, Harvey

By Ben Sharples and Grant Smith on 9/12/2017

HONG KONG and LONDON (Bloomberg) -- Oil steadied near $48/bbl as refiners on the U.S. Gulf Coast continued to recover following two strikes from Hurricane Harvey, while Irma weakened further after moving inland.

Futures slipped 0.5%in New York after rising 1.2% Monday. U.S. refiners closed by Hurricane Harvey more than two weeks ago continue to restart, including the nation’s largest, operated by Motiva Enterprises. The 12 OPEC nations engaged in production cuts reduced their output by 109,000 bpd last month, according to a person familiar with the matter.

The hurricanes have rattled energy markets, with Irma shutting Florida fuel stations and ports and Harvey earlier halting about one-quarter of the nation’s refining capacity. Goldman Sachs Group forecasts the two storms will initially hurt crude demand by 600,000 bpd, though the recovery will likely raise consumption and offset that loss.

“Following the price noises from the hurricanes in the U.S. Gulf,” oil markets are showing underlying strength, said Bjarne Schieldrop, chief commodities analyst at SEB AB in Oslo. “In the shorter term we have a constructive price situation. OPEC is standing firm on its cuts.”

WTI for October delivery was at $47.83/bbl on the New York Mercantile Exchange, down $0.24 cents. Total volume traded was about 19% below the 100-day average. Prices rose $0.59 to $48.07 on Monday.

Brent for November settlement slid $0.27 to $53.57/bbl on the ICE Futures Europe exchange after gaining $0.06 on Monday. Brent traded at a premium of $5.19 to November WTI.

Irma has softened to a tropical depression as it moves north after dumping heavy rain across Florida and cutting power to millions of people.

Irma made landfall Sunday as a Category 4 storm, battering Miami before beginning its march up the coast as its fury began to dissipate. Seven million utility customers across the U.S. are without power and the storm is forecast to drop 8 to 15 in. of rain in its wake in parts of northern Florida.

Oil Market News

OPEC’s estimate of its oil production, compiled from four of six external data sets known as secondary sources, fell to 30.0 MMbpd excluding output from Libya and Nigeria, according to a person familiar with the matter. Saudi Arabia says it’s open to another extension of output cuts after meeting with oil ministers from Venezuela, Kazakhstan and the United Arab Emirates in the Kazakh capital of Astana. Iraq’s SOMO said it needs more time to study a proposed oil-pricing methodology for sales to Asia before it can be implemented, according to traders who received a notification from the state-run company.

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