September 12, 2017
Oil steadied near $48 a barrel 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 percent in New York after rising 1.2 percent 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 LLC. The 12 OPEC nations engaged in production cuts reduced their output by 109,000 barrels a day 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 Inc. forecasts the two storms will initially hurt crude demand by about 600,000 barrels a day, 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.”
West Texas Intermediate for October delivery was at $47.83 a barrel on the New York Mercantile Exchange, down 24 cents, at 10:29 a.m. in London. Total volume traded was about 19 percent below the 100-day average. Prices rose 59 cents to $48.07 on Monday.
See also: Florida Emerges to Assess Damage as Irma Ebbs to Mere Storm
Brent for November settlement slid 27 cents to $53.57 a barrel on the London-based ICE Futures Europe exchange after gaining 6 cents on Monday. The global benchmark crude 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 inches (20 to 38 centimeters) of rain in its wake in parts of northern Florida.
OPEC’s estimate of its oil production, compiled from four of six external data sets known as secondary sources, fell to 30.004m b/d 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.