Oil Climbs to Four-Week High as Refinery Demand for Crude RisesBy
Some Gulf fuel producers hobbled by Harvey resume operations
Hurricane Irma leads to terminal shutdown, platform evacuation
Oil closed at a four-week high as refiners revved up plants pounded by Hurricane Harvey, sparking demand for crude.
Futures rose 1 percent in New York while gasoline declined for a third session. Motiva Enterprises LLC’s refinery 90 miles east of Houston, which processes more crude than any other North American plant, was on track to reach 40 percent of its normal working rate within days. Tankers that had been stranded offshore began delivering crude to refiners that had been in danger of running dry last week. Meanwhile, Hurricane Irma swept over the Caribbean, affecting energy infrastructure in its path.
The restart of Gulf refineries “implies that we are not going to get these great accumulations of inventory in oil as some had thought,” Bart Melek, head of global commodity strategy at TD Securities in Toronto, said by telephone.
Harvey knocked out more than 20 percent of the nation’s refining capacity in just 48 hours, according to Sandy Fielden, Morningstar Inc.’s director of oil and products research. The storm also shut pipelines, ports and offshore platforms as it intensified before making landfall on Aug. 25. Although many of those facilities are back in service, the recovery is incomplete due to extensive flooding in some areas that will probably require costly, time-consuming repairs.
“The refineries are coming back online,” Craig Bethune, a senior portfolio manager who focuses on natural resources investments at Manulife Asset Management Ltd. in Toronto, said by telephone. But “the market still views pricing as range-bound.”
Pioneer Natural Resources Co. Chief Executive Officer Tim Dove expects oil prices to remain range-bound through 2018, according to remarks he made at a New York energy conference on Wednesday.
Futures were little changed from the settlement after the industry-funded American Petroleum Institute was said to report U.S. crude supplies rose by 2.79 million barrels last week. West Texas Intermediate crude for October delivery traded at $49.17 a barrel at 4:38 p.m. after settling at $49.16 on the New York Mercantile Exchange. WTI is approaching its 200-day moving average at about $49.50 a barrel.
Brent for November settlement added 82 cents to end the session at $54.20 a barrel on the London-based ICE Futures Europe exchange, the highest level since April. The global benchmark traded at a premium of $4.58 to the November WTI contract.
October gasoline futures in New York dropped 1.5 percent to settle at $1.6733 a gallon.
Hurricane Irma was headed toward Puerto Rico on a path that may lead to a potential landfall in Florida this weekend. Models showed it veering away from oil platforms in the central and western Gulf of Mexico. Yet, it still is already having an impact on other energy assets.
NuStar Energy LP shut its St. Eustatius oil terminal on Monday in the Caribbean and BP Plc is evacuating non-essential personnel from its Thunder Horse platform 150 miles southeast of New Orleans. Meanwhile, Buckeye Partners LP initiated its full-plant shutdown procedures at its facility in Puerto Rico, suspending all marine terminal operations.
“If it goes through Florida, that’s definitely a headwind for demand” for gasoline and other fuels, Bethune said.
U.S. crude stockpiles likely rose by 4 million barrels last week, while gasoline inventories shrank by 5.2 million barrels for the biggest decline since March, according to a Bloomberg survey before government data to be released on Thursday, a day later than usual because the Labor Day holiday was on Monday.
- The U.S. is seeking an oil embargo on North Korea and an asset freeze on its leader Kim Jong-Un, AFP reports in tweets, citing a draft of a United Nations resolution.
- UBS Group AG trimmed its Brent and WTI price forecasts, citing expectations that the global crude glut will not abate until the middle of 2018, according to a report.
- Libyan authorities reopened a valve that had been closed on the pipeline linking the Sharara oil field, the nation’s largest, and its Zawiya refinery, according to a person familiar with matter.
— With assistance by Sharon Cho, Heesu Lee, and Grant Smith