Published: Wed, September 13, 2017
Global Media | By Garry Long

Oil weakens on fears Irma could dent United States demand

Oil weakens on fears Irma could dent United States demand

News of the talks on Sunday helped offset downward pressure on oil prices amid worries that energy demand would be hit hard by Hurricane Irma and its aftermath. Irma made a landfall in Florida on Sunday and is barreling through the state to the northwest.

Hurricane Harvey, the storm that struck Texas more than two weeks ago, will remain a bigger concern for the oil market than Hurricane Irma which weakened Monday to a tropical storm, Goldman Sachs said.

"For U.S. shale producers ... when it's $45, no-one is really happy, but you get to $50 and they're willing to hedge their production so there's a question of "is this a cap on near-term prices"?" she added, referring to a West Texas Intermediate price of $50 as the "iceberg of U.S. production".

Vanguard survey of crude oil markets showed that the price of Brent which is usually used to benchmark the prices of other crudes stood at $54.30 per barrel yesterday.

OPEC and Russian Federation have also said they would cut oil production by 1.8 million barrels per day, as a supply glut continues and Iran prepares to boost its output.

Hillary Clinton Had No Concession Speech, Blames Loss On 'White People'
Choking back tears, Clinton described the pain of attending Trump's inauguration - and listening to her victorious opponent's speech, which she called a "cry from the white nationalist gut".

The Saudi energy minister and his Venezuelan counterpart said both their countries are exceeding full compliance with their targeted production cuts and that they shared "an optimistic outlook" on global supply and demand for crude in 2018.

Even so, US crude stockpiles are likely to build in the next few weeks as refiners try to catch up with the backlog of oil stranded during the storms of the past two weeks, analysts said. The American Petroleum Institute releases its own weekly inventory report late Tuesday.

OPEC said inventories were falling and that an increase in the price of Brent crude for immediate delivery to a premium over that for later supplies, known as backwardation, raised hopes that a long-awaited market rebalancing was under way. Inventories of gasoline and distillate were expected to fall 4 million barrels and 300,000 barrels, respectively. Pipelines from Cushing run to key refineries in the U.S. Gulf Coast of Mexico and the hub is an important indicator of crude demand.

OPEC and other producers, including Russian Federation, have agreed to reduce output by about 1.8 million bpd until next March in a bid to reduce global oil inventories and support oil prices.

Mark Zandi, the chief economist at Moody's Analytics, said the US economy could suffer lost revenue from the storms and the estimate for third-quarter gross domestic product could drop a half point to 2.5 percent as a result.

Like this: