Oil Inventories Are On The Rise Again (USO)

Jon Howard
September 10, 2017

This has provided a support for crude oil prices, as have reports of another three storms brewing in the area of the Gulf, with the potential of growing to hurricanes, causing further shutdowns and damage.

Oil prices were little changed on Friday as the global petroleum industry remains in the grip of Caribbean hurricanes which have pummelled the region for the last two weeks.

Oil prices have slipped due to a lack of crude demand as several USA refineries in the Gulf coast continue to remain closed after the impact of Hurricane Harvey and growing concern over Hurricane Irma, which is now advancing towards the Caribbean and Florida coast.

US West Texas Intermediate (WTI) crude futures were at $48.98 barrel, 11 cents below their last settlement.

Its predecessor, Harvey which hit Texas on August 25, shut a quarter of USA refining capacity, sharply reducing demand for crude that sent prices slumping.

Hurricane Harvey has killed more than 40 people and brought record flooding to the United States oil heartland of Texas, paralyzing at least 4.4 million barrels per day (bpd) of refining capacity, according to company reports and Reuters estimates.

Brent futures LCOc1 gained 29 cents, or 0.5 percent, to settle at $54.49 a barrel, its highest close since April 18 for a second day in a row.

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But as the refinery sector gradually recovers, so is its crude processing.

As of Wednesday, about 3.8 million barrels of daily refining capacity, or 20 percent of the USA total, was shut in, though a number of refineries and petroleum-handling ports were restarting.

Focus was shifting to three other hurricanes that are now tearing through the Caribbean and Gulf of Mexico. However, U.S. oil production also hit, with weekly output down from 9.5 million bpd to 8.8 million bpd.

Port and refinery closures along the Gulf coast and harsh sea conditions in the Caribbean have also impacted shipping.

"Imports (of oil) to the U.S. Gulf Coast fell to levels not seen since the 1990s", ANZ bank said.

It will take weeks for the US petroleum industry to return to full capacity, analysts report.

Another Atlantic storm, named Jose, is following on Irma's heels and has been upgraded to hurricane strength by the U.S. National Hurricane Centre.

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