Published: Sun, September 10, 2017
Money | By Oscar Reynolds

Oil prices fall as another hurricane set to hit Caribbean coast

Oil prices fall as another hurricane set to hit Caribbean coast

Irma barreled into Caribbean islands overnight with wind speeds up to 185 miles per hour (295 kph) and was heading for Florida.

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.

As of 1656 BST, front month West Texas Intermediate crude oil futures were 0.06% lower to $49.13 a barrel on the NYMEX.

As of Thursday, about 3.8 million barrels of daily refining capacity, or about 20 percent, was still shut in and it will take weeks for the US petroleum industry to return to full capacity, analysts said.

Oil prices jumped up on September 8 following the data on the slowdown of the US refineries in the Gulf of Mexico region after the Hurricane Harvey.

U.S. Gulf Coast facilities were slowly recovering from the devastating effects of Harvey, which hammered Louisiana and Texas nearly two weeks ago, shutting key infrastructure in the heart of the U.S. oil and natural gas industry. Nationwide crude output slid by 749,000 barrels a day to 8.78 million a day.

"Hurricanes can have a lasting effect on refinery and industry demand", stated Eugen Weinberg, head of commodities research at Commerzbank in Frankfurt.

Based on current refinery operations, anywhere from 1 million to 2.2 million barrels per day (bpd) of refining capacity are offline, as well as just under half a million bpd of production.

The American Petroleum Institute (API) reported a build of 2.791 million barrels in U.S. crude oil inventories, compared to analyst expectations of a build of 4 million barrels for the week ending September 1.

Oil headed for the first weekly gain since July as Gulf Coast refiners ramp up crude processing after disruptions from Hurricane Harvey.

"Most refineries are restarting and we expect a near-full recovery by month-end", USA investment bank Jefferies stated.

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

U.S. Gulf Coast utilization rates dropped to 63.4 percent, the lowest rates since the EIA began collecting the data in 2010.

Harvey hit hard the heart of the United States oil industry.

Money managers raised their net long U.S. crude futures and options positions in the week to September 5, the U.S. Commodity Futures Trading Commission (CFTC) said.

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

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