Published: Tue, September 12, 2017
Health Care | By Oscar Goodwin

Oil Rises as US Refineries Restart, Irma Wanes

Oil Rises as US Refineries Restart, Irma Wanes

West Texas Intermediate crude for October delivery rose 59 cents to settle Monday at $48.07 barrel on the New York Mercantile Exchange.

The two hurricanes are anticipated to inflict a "bearish shock" on oil balances in September, hurting global demand by 900,000 barrels per day (bpd) and supply by almost 300,000 bpd, Goldman reported.

Harvey struck the USA oil hub of Texas two weeks ago, knocking out a quarter of the nation's refineries. Benchmark Brent crude has lost 6 per cent this year and was trading at $53.81 a barrel at 11.10am UAE time on Tuesday.

On Harvey's heels, Hurricane Irma slammed into Florida on Sunday, leaving more than 7.4 million homes and businesses without power, but has since been downgraded to a tropical storm.

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NEW YORK: Oil prices rose on Monday as key USA refineries began restarts following Hurricane Harvey, which may help revive crude oil processing, while fuel prices fell as Hurricane Irma is likely to clip demand for gasoline and diesel.

Al-Falih agreed in separate talks with the ministers in the Kazakh capital Astana that steps taken by OPEC and other major crude producers such as Kazakhstan have contributed to better market stability, according to three emailed statements from the Saudi energy ministry.

The deal agreed late past year to reduce output by about 1.8 million bpd until March 2018 helped to keep prices as high as $58 a barrel in January, but they have since sagged as global stocks have not fallen as quickly as expected.

The Central Asian nation increased oil and gas condensate output by 9.9 percent in January-July to 1.724 million bpd, exceeding its quota of 1.7 million bpd under the cut pact. That has raised concerns about demand, as storms tend to cut down on driving, particularly as many cars have been destroyed.

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Harvey is still likely to be a bigger driver for the crude market, analysts at Goldman Sachs said. Refining runs on the U.S. Gulf Coast hit a record low in the week to September 1, just after the storm, due to shutdowns. We have factored in 40% current utilisation rates at the country's largest refinery in the process of restarting since late last week, Motiva's 603,000 b/d plant at Port Arthur, and partial rates at a 270,000 b/d CDU at Shell's 340,000 b/d Deer Park refinery, which began the process of resuming operations over the past weekend.

But the oversupply of USA crude persists, causing a recent widening in the WTI/Brent spread, said James Williams, president of energy consultant WTRG Economics.

The Saudi energy ministry said Energy Minister Khalid al-Falih agreed with his Kazakh counterpart that the option to extend the rebalancing effort would be considered in due course.

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