OPEC Energy Production Fell In August, Oil Stuck At $50?
Sep 14 2017
Oil prices ended almost flat last week after a bout of choppy trading as markets grapple with the impact of the twin hurricanes that hit the US.
USA gasoline prices, however, fell despite a record drawdown in inventories of the motor fuel. A quarter of US refining capacity to be taken off-line due to the hurricane, sapping demand.
Irma hit Florida on Sunday morning as a risky Category 4 hurricane. Analysts expect crude oil inventories rose by around 3.2 million barrels at the end of last week.
Analysts say USA stocks data may not give a full picture in coming weeks because of two major hurricanes - Harvey and Irma.
This year's hurricane season still has the potential to be "particularly destructive", with consequences for the oil market, it said.
The Paris-based IEA, in its monthly report, noted that the U.S.' reliance on the Gulf Coast makes it vulnerable to similar events like Harvey, saying "normal operations are too important to fail".
Even though the sector was able to cope, the International Energy Agency said severe weather in the United States should serve as a warning for oil markets.
US West Texas Intermediate (WTI) crude was down 30 cents at $47.77 a barrel.
Some worries about rising USA crude inventories persisted.
"This was a good thing because the estimated loss of refinery output in September of about 1.6 million barrels per day has only partially been offset by lower demand", it said.
US gasoline stocks slumped 8.4 million barrels, the largest weekly decline since data began in 1990. That's down from an August estimate of 9.91 million barrels. The U.S. benchmark advanced 16 cents, or 0.3%, on Tuesday.
Hurricanes have shaken energy markets, with Irma shutting fuel stations and ports across Florida and Harvey strangling refineries in the nation's energy hub.
The Organization of Petroleum Exporting Countries and other producers, including Russian Federation, are reducing crude output by about 1.8 million barrels per day until next March in a bid to reduce inventories and support prices, Reutersreported.
At the start of August, the OPEC meeting raised hopes of better compliance with Saudi indicating more export cuts. A more meaningful reduction in global inventories will be imperative for establishing a firm floor for oil prices.
Two months ago after a ministerial committee meeting monitoring compliance with the deal, made up of officials from OPEC and those outside the cartel such as Russian Federation said that Nigeria has voluntarily agreed to join the OPEC imitative of production curb and will put a cap on country's production at 1.8 million barrels per day.