Oil Tumbles as Irma Imperils Demand in Gasoline-Thirsty FloridaBy
Powerful Atlantic storm on course to slam Florida early Sunday
Texas refineries cranking out fuel after post-Harvey restarts
Oil declined the most since July as Hurricane Irma threatened to slash energy demand that had only just begun to recover from the wrath of Harvey.
Futures slid 3.3 percent in New York. While Valero Energy Corp. and other refiners resumed fuel production after Harvey roared ashore two weeks ago, demand for gasoline and other transportation fuels may falter across much of the southeastern U.S. if Florida and neighboring states take a direct hit from Irma. Florida burns more gasoline than any other state except California and Texas.
Uncertainty has traders “pulling in their horns ahead of the storm,” Phil Flynn, senior market analyst at Price Futures Group Inc. in Chicago, said by telephone. “They are worried about demand destruction.”
The most recent data from the Energy Information Administration showed last week’s rise in U.S. crude stockpiles was the largest since March. Meanwhile, deliveries of foreign crude to the Gulf Coast fell to the lowest in records going back to 1990 as Harvey’s wind and rain shut every major port in the region.
“People are thinking we’ve had the worst of the refinery outages and that’s behind us,” Michael Lynch, president of Strategic Energy & Economic Research Inc. in Winchester, Massachusetts, said by telephone. “The refineries will be starting up and absorbing more crude.”
West Texas Intermediate for October delivery declined $1.61 to settle to $47.48 a barrel on the New York Mercantile Exchange. Total volume traded was about 26 percent above the 100-day average. Prices were up 0.4 percent for the week.
Brent for November settlement fell 71 cents to end the session at $53.78 a barrel on the London-based ICE Futures Europe exchange. The global benchmark traded at a premium of $5.72 to November WTI, the largest since 2015.
The market also “seems to be a little technically heavy,” Flynn said. “When you don’t know how exactly the fundamentals are going to play out, the computers are just going to play the charts.”
- The U.S. oil rig count dropped by 3 to 756 rigs, the lowest level since June, data from Baker Hughes showed Friday.
- Russia should follow Mexico in using financial instruments to lock in future oil revenue as producers confront growing risks from cyclical price moves, according to Goldman Sachs Group Inc.
— With assistance by Ben Sharples, and Grant Smith