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Seoul - Oil held gains near the highest in more than three weeks as key refineries and pipelines restarted operations following shutdowns forced by Hurricane Harvey, reviving crude demand in the heart of the US energy sector.
Futures were little changed in New York after closing 2.9% higher on Tuesday. While US Gulf Coast refiners are working to restore operations to normal, traders are also watching the approaching stronger Hurricane Irma.
US crude stockpiles likely expanded by 2.5 million barrels last week, while gasoline inventories dropped by 5 million barrels, which would be the biggest loss by volume since March, according to a Bloomberg survey before government data to be released on Thursday.
Harvey forced refineries, pipelines, ports and offshore platforms to shut as the storm intensified before making landfall on August 25. Many of those facilities are back in service, though others have yet to resume production. Goldman Sachs forecast half of the refining capacity lost to the storm will be back online by Thursday and may prove positive for the oil market in a few months.
“Depending on how devastating Hurricane Irma becomes, it will temporarily decide the direction of crude and gasoline prices,” Ahn Yea Ha, a commodities analyst at Kiwoom Securities, said by phone in Seoul. “Although prices are currently reacting to refineries restarting operations, Irma will push crude down again as it’s approaching near Florida.”
West Texas Intermediate crude for October delivery was at $48.73 a barrel on the New York Mercantile Exchange, up 7 cents, as of 2:57pm in Singapore. The contract on Tuesday added $1.37 to settle at $48.66 a barrel, the highest since August 11.
Brent for November settlement slipped 5c to $53.33 a barrel on the London-based ICE Futures Europe exchange. Prices advanced $1.04 to close at $53.38 a barrel on Tuesday. The global benchmark traded at a premium of $4.17 to the November WTI contract.
Gasoline drop
October gasoline futures in New York dropped as much as 1.5% to $1.6740 a gallon, falling for a third session. The drop comes after prices surged in August by the most in more than a year.
Hurricane Irma, the most powerful storm to form in the open Atlantic Ocean, was moving toward Puerto Rico late on Tuesday. Although the latest models show the storm veering away from gas and oil platforms off the coast of Texas and Louisiana, sparing Houston from more devastation, it’s still threatening to wreak havoc upon the Caribbean islands and Florida.
Oil-market news:
• The oil production cap deal with the Organisation of the Petroleum Exporting Countries may be extended beyond the first quarter of next year with changes to terms if the market remains “unbalanced,” according to Russian Energy Minister Alexander Novak.
• Libya’s Sharara oil field, which is the nation’s biggest, is due to reopen on Wednesday after a final agreement was reached with the faction that had closed it, said a person familiar with the matter who asked not to be identified because the information is private.
• Energy mergers and acquisitions may slow over the next month or so as companies assist displaced employees and people take time to help each other with flooded homes following Houston’s devastating floods.
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