U.S. oil slides 3 percent as Irma threatens demand
- Author: Eleanor Harrison Sep 10, 2017,
Sep 10, 2017, 8:01
World oil prices are rising on Sept.8 amid the report about a sharp decline in the U.S. oil production over the last week due to the Hurricane Harvey. "The data scrambles the recent trend of declining crude inventories and further rises are likely in the weeks ahead", said John Kilduff, partner at energy hedge fund Again Capital LLC in NY.
Late in the week, oil futures traded mixed, with Brent rising to a 5-1/2 month high while USA crude slipped on a bigger-than-expected crude stock build as the restart of US refiners after Hurricane Harvey was countered by the threat of Hurricane Irma.
As of 1656 BST, front month West Texas Intermediate crude oil futures were 0.06% lower to $49.13 a barrel on the NYMEX.
Reflecting the impact of Harvey which hit the Gulf Coast on August 25, the EIA said US oil refinery utilization rates slumped 16.9 percentage points to 79.7 percent last week, the lowest rate since 2010.
The price for October futures of Brent oil has increased by 0.07 percent to $53.42 per barrel as of 08:06 (UTC + 4).
In parallel, crude oil inventories jumped by 4.6m barrels from the previous week to reach 462.4m.
He noted the big drop in refinery utilization "almost assures" crude stockpiles will continue to rise in coming weeks.
According to Reuters, as of yesterday, about 3.8 million bpd in refining capacity remained shut down, representing a fifth of the usa total. 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 amid the Gulf coast and harsh sea conditions in the Caribbean have also affected shipping.
"Imports (of oil) to the US Gulf Coast fell to levels not seen since the 1990s", ANZ bank said.
Analysts said that it can take weeks for normalisation of United States petroleum industry, which may again be affected as Irma is anticipated to hit Florida.
With storm Katia about to hit the Mexican Gulf coast, there are three major hurricanes now active in the region. Hurricane Irma hit the Dominican Republic and Haiti on Friday, heading for Cuba and the Bahamas.
The U.S. National Hurricane Center (NHC) said that Irma was still a Category 5 Hurricane, with wind speeds of 175 miles per hours (280 km/h).