Oil prices soften as market assesses hurricane damage

Chelsea West
August 31, 2017

Energy information provider S&P Global Platts said in a report Wednesday that roughly 2.33 million barrels per day of Texas's refining capacity was still shut down.

US gasoline futures jumped 4 percent to settle at 1.7833, the highest in more than two years.

US oil prices finished Wednesday with a loss (http://www.marketwatch.com/story/oil-pulls-back-further-as-harvey-continues-to-weigh-2017-08-30), at their lowest level in more than four weeks. International Brent crude futures closed up 11 cents or 0.2 percent to $52.00 a barrel.

Goldman also said around 1.4 million bpd of crude production was disrupted, equivalent to 15 percent of total USA output.

Although there have been weeks upon weeks of crude oil inventory draws as of late, oil prices have still failed to climb with any significant meaning-a fact which has not deterred oil production in the United States, which stood at 9.528 million bpd for the week ending August 18, well on its way toward the most recent 2018 daily average proposed by the EIA's Short Term Energy Outlook of 9.91 million barrels.

Crude oil prices continued to lose ground because of the fallout from Tropical Storm Harvey, though prices may be supported by tensions over North Korea. As a result, the discount for U.S. WTI versus Brent surpassed $5 a barrel, its widest in more than two years.

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Flooding from Hurricane Harvey is devastating the Houston and Galveston areas of Texas, major hubs for US oil refining. But MRs may get more work in Europe to bring gasoline cargoes to the US.

Motiva Enterprises chose to close its 603,000bpd plant in Port Arthur, Texas, while Total halved the output of its refinery, which is in the same area.

Harvey hit the US Gulf coast last Friday.

Crude markets were also looking at disruptions in Libya and Colombia.

"In the coming weeks, we expect Harvey's impact to make it harder for OPEC to rebalance the market and maintain bullish sentiment", analysts at Barclays said in a note. Jefferies bank said it was lowering its fourth-quarter Brent oil price estimates to $55 a barrel from $60 and its 2018 forecast to $57 from $64.

Other reports by TheSundaySentinel

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