Global Oil Prices Diverge in Har­vey's Wake

The Star (St. Lucia) - - BUSINESS -

Oil prices were mixed Friday, as Brent ex­tended a week of steady gains but U.S. crude re­mained stuck at pre-Hur­ri­cane Har­vey lev­els.

Brent crude, the global bench­mark, rose 0.5% to $54.78 a bar­rel in mid­morn­ing trad­ing in Lon­don. On the New York Mer­can­tile Ex­change, West Texas In­ter­me­di­ate fu­tures traded down 0.3% at $48.94 a bar­rel.

WTI, the U.S. stan­dard, was weaker be­cause de­mand for oil from re­finer­ies has been slow to re­turn to nor­mal lev­els in the wake of Har­vey.

"It's still not back to full speed and that's pre­vent­ing stocks from draw­ing," said Ole Hansen, head of com­mod­ity strat­egy at Saxo Bank.

Weaker de­mand has re­sulted in higher crude in­ven­tory lev­els in the U.S., with con­cerns about ex­cess sup­ply weigh­ing on prices over the past two weeks.

The U.S. lost more than 20% of its re­fin­ing ca­pac­ity in the days af­ter the storm but many re­finer­ies have since started to come back on­line.

Brent prices, mean­while, neared a 5-month high as they con­tinue to ben­e­fit from higher re­fin­ery de­mand in Europe and Asia. With U.S. Gulf Coast ports and re­finer­ies out of com­mis­sion, Euro­pean and Asian re­fin­ers have had to in­crease pro­duc­tion, el­e­vat­ing their de­mand for crude sup­plies.

"Nearly every re­fin­ery out­side Louisiana and Texas is op­er­at­ing near full ca­pac­ity," said Thomas Pugh, com­modi­ties econ­o­mist at Cap­i­tal Eco­nom­ics.

But Mr. Pugh said it was only a ques­tion of "when, not if" U.S. crude de­mand would re­bound.

Saxo's Mr. Hansen cau­tioned that th­ese are "tem­po­rary fac­tors driv­ing the mar­ket." The up­side for Brent is "in­creas­ingly lim­ited," he ar­gued.

The U.S. En­ergy In­for­ma­tion Ad­min­is­tra­tion re­leased weekly data Thurs­day show­ing crude in­ven­to­ries rose by 4.6 mil­lion bar­rels dur­ing the week ended Sept. 1. The in­crease was largely ex­pected by an­a­lysts and was tem­pered by data show­ing pro­duc­tion dropped by roughly 750,000 bar­rels a day as a re­sult of the storm.

In­vestors and an­a­lysts were wait­ing to see whether Hur­ri­cane Irma and ex­pected sub­se­quent storms would af­fect U.S. pro­duc­tion in the Gulf Coast in the com­ing days.

Oil mar­kets are also await­ing monthly re­ports set to be pub­lished next week by the Or­ga­ni­za­tion of the Petroleum Ex­port­ing Coun­tries and the In­ter­na­tional En­ergy Agency. An­a­lysts will be look­ing to see if the IEA ad­justs its de­mand es­ti­mates.

Among re­fined prod­ucts, Nymex re­for­mu­lated gaso­line blend­stock -- the bench­mark gaso­line con­tract -- was down 0.7%, at $1.66 a gal­lon, hav­ing given up gains last week amid fears of a gaso­line short­age in Amer­ica.

But ICE gasoil, a bench­mark for diesel fuel, changed hands at $532.50 a met­ric ton, up 1.7% from the pre­vi­ous set­tle­ment. The fuel has re­ceived a boost be­cause of dis­rupted ex­ports of U.S. dis­til­lates from the Gulf Coast.

--- Fox Busi­ness

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