Oil steady as US refining demand rises but ample crude supplies weigh
SINGAPORE (Reuters) – Oil prices held steady on Thursday, supported by rising demand from the United States where Gulf Coast refineries are restarting in the wake of Hurricane Harvey.
But three more hurricanes in the Caribbean and Atlantic were threatening more disruption.
Despite the storms, ongoing high crude output including from the Organization of the Petroleum Exporting Countries (OPEC) meant there were ample supplies to meet demand.
US West Texas Intermediate (WTI) crude futures were at $49.08 barrel at 0237 GMT, 8 cents below their last settlement, but not far off their highest in more than three weeks, reached in the previous session.
Brent crude futures, the benchmark for oil prices outside the United States, dipped 9 cents to $54.11 a barrel, though still not far from May highs reached the previous day.
US Gulf Coast facilities were slowly recovering from the devastating effects of Harvey, which hammered Louisiana and Texas almost two weeks ago, shutting key infrastructure in the heart of the US oil and natural gas industry.
As of Wednesday, about 3.8 million barrels of daily refining capacity, or about 20 percent, was shut in, although a number of the refineries, as well as petroleum handling ports, were in the process of restarting.
ANZ bank said on Thursday that US crude prices should be supported “as US refineries increase their oil demand as they recover from recent flooding”.
While Harvey’s effects were slowly fading, the massive Hurricane Irma hit Caribbean islands overnight and was heading for Florida. Fuel shortages were reported in the state as suppliers struggled to keep up with demand from customers anxious to fill tanks ahead of the storm’s landfall, expected towards the weekend.
Another Atlantic storm, named Jose, is following on Irma’s heels and has been upgraded to hurricane strength by the US National Hurricane Centre. Yet another hurricane, Katia, is developing in the Gulf of Mexico.
“Demand may continue to be distorted as multiple hurricanes make their way across the Caribbean,” said Jeffrey Halley, senior market analyst at futures brokerage OANDA.
OPEC OUTPUT DIPS BUT REMAINS HIGH
Outside the United States, the bank said that the return of Libya’s largest oil field to production was “less supportive” of prices.
Oil production at Libya’s Sharara field, the country’s largest, was resuming on Wednesday after a valve was reopened on a pipeline shut by an armed group for more than two weeks, Libyan oil industry sources said.
Overall, global oil supplies remain plentiful despite a dip in OPEC’s August exports.
OPEC’s crude exports in August were 25.19 million barrels per day (bpd), their lowest level since April, according to Thomson Reuters Oil Research.
Still, average 2017 levels for January-August of 25.05 million bpd were above the average 24.85 million bpd in 2016, despite OPEC’s pledge to hold back supplies between January this year and March 2018.