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Oil prices down as traders determine U.S. hurricanes impact

Oil prices down as traders determine U.S. hurricanes impact

The oil demand by Gulf Coast refineries has declined in the wake of Harvey, as many operations had to curtail or shut-down production temporarily.

US crude oil production will grow in the remaining months of this year and reach its highest-ever annual average in 2018, despite the impact of Hurricane Harvey, the Energy Information Administration (EIA) forecast on September 12.

OPEC oil output by its 14 member countries fell in August by 79,000 barrels per day (bpd) from July to 32.76 million bpd, below a demand forecast.

It was the first fall in global production in four months. US refineries produced about 9.5 million barrels of gasoline a day last week, down about 1.1 million barrels compared to the prior week.

USA gasoline prices fell despite a record drawdown in fuel inventories.

Earlier in the week, prices received support as Saudi Arabia held discussions about extending the deal to curb production, reduce supply and stabilize prices beyond the March deadline.

Opec is in the midst of a deal with non-Opec producers including Russian Federation to cut production by 1.8m barrels per day until March 2018. US crude exports fell to 6.5 million bpd, the lowest since 2014, when crude export restrictions were first relaxed.

Rainwater from Hurricane Harvey surrounds oil refinery storage tanks in this aerial photograph taken above Texas City, Texas, U.S., on Wednesday, Aug. 30, 2017.

The spread, or difference, between WTI and Brent has widened in recent weeks because some crude oil in the United States remains locked in storage.

Meanwhile, the report put the country's heavy oil price at $48.7 in August, an increase of $2.69 or 5.8 percent from $46.01 in June.

Gasoline stocks fell 8.4 million barrels, the largest draw on record, compared with analysts' expectations in a Reuters poll for a 2.1 million-barrel drop. Before the threat of North Korea emerged, growing oil inventories and demand had offered a glimmer of hope in rebalancing the oil market, the International Energy Agency (IEA) said in its latest monthly oil report released in August. Nevertheless, Libya reversed this trend as its crude oil production slipped down to an 890,000 barrels a day by an estimated 112,000 barrels.

Harvey is still likely to be a bigger driver for the crude market, analysts at Goldman Sachs said.

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