Published: Tue, September 12, 2017
Markets | By Noel Gibbs

Oil prices up amid talks on possible oil deal prolongation

Oil prices up amid talks on possible oil deal prolongation

He noted that the impact of Harvey on USA crude demand was "not as weak as initially anticipated", which was providing a slight boost to WTI.

October West Texas Intermediate crude tacked on 59 cents, or 1.2%, to settle at $48.07 a barrel on the New York Mercantile Exchange after tapping a low at $47.

WTI futures dropped more than 3% on Friday even as the number of oil rigs operating in the USA fell by three to 756, still remaining near the highest level since April 10, 2015, according to data from energy services firm Baker Hughes (BHGE), which tracked the seven-day period ended September 8.

But while the gap is readily understandable for near-term contracts, impacted by hurricane damage, there are also large price differences between Brent and WTI contracts stretching well into next year.

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The question next becomes how North Korea will respond. "Beyond sanctions there is not much cohesion as to the path ahead". The final agreement was reached after negotiations between the US and China, the North's ally and major trading partner.

While Harvey's effects were slowly fading, the massive Hurricane Irma hit Caribbean islands overnight with wind speeds up to 185 miles per hour (295 km/h) and was heading for Florida, where fuel shortages were reported as gas stations struggled to keep up with demand from customers filling tanks ahead of the storm's landfall, expected this weekend.

"With another hurricane threatening to hit the United States coast, traders still remain cautious".

OPEC's secretary-general Mohammad Barkindo said on Monday the supply cut deal was expected to help the global oil market rebalance and strong demand could further reduce oil inventories. However, due to militant attacks, Libya has lost around 30 percent of production in August.

Funds also increased their net long position in US heating oil by 11 million barrels to 41 million barrels, the highest for 42 months.

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LONDON-Oil prices oscillated Monday morning, with US crude recovering a fraction of its losses from the last session and Brent trending downwards.

Traders are saying that in the wake of Hurricane Harvey, the USA could see as much as 40-60 million barrels added to inventory while shuttered refineries struggle to come back online.

Harvey struck the US oil hub of Texas two weeks ago, knocking out a quarter of the nation's refineries.

"With almost all ports reopening, the key to a normalization in crude and petroleum product supply will therefore hinge on how long some refineries may be forced to stay offline, with guidance that at least 1.4 million barrels per day (mb/d) of capacity could still be offline past mid-September", Goldman analysts led by Damien Courvalin wrote in the report. Hurricane Irma may not impact U.S. crude oil production as it's far from the Gulf Coast.

South Florida starts to feel effects of Hurricane Irma
Irma also snapped miles upon miles of power lines and toppled three massive construction cranes over Miami and Fort Lauderdale. Mobile home residents and Florida evacuees camping in RVs were urged to head to one of seven storm shelters in the area.

Saudi Arabian Energy Minister Khalid al-Falih earlier discussed with his Venezuelan and Kazakh counterparts the possible extension of the global oil supply cut agreement beyond March 2018.

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