Oil caps best week since July

Nearly a quar­ter of US refin­ing ca­pac­ity was shut­tered in the wake of Hur­ri­cane Har­vey

Gulf News - - Business -

Oil had its big­gest weekly gain since late July as Texas re­finer­ies re­cov­er­ing from Hur­ri­cane Har­vey pro­cessed more crude and global de­mand fore­casts bright­ened.

Fu­tures rose 5.1 per cent this week in New York, set­tling just be­low the $50-a-bar­rel (Dh184) thresh­old that’s kept the in­dus­try in thrall. The in­crease was buoyed by higher de­mand fore­casts from the In­ter­na­tional En­ergy Agency and ex­pec­ta­tions Opec and its part­ners will ex­tend out­put cuts be­yond the March ex­pi­ra­tion date of their deal.

“The nar­ra­tive in the mar­ket is that de­mand has re­ally picked up,” said John Kil­duff, a part­ner at New York-based hedge Again Cap­i­tal LLC. “As a re­sult, we’ve got­ten this push higher.”

Nearly a quar­ter of US refin­ing ca­pac­ity was shut­tered in the wake of Har­vey. Two weeks later, only three Gulf Coast re­finer­ies re­main shut, ac­cord­ing to the Depart­ment of En­ergy. The rest — in­clud­ing Mo­tiva En­ter­prises LLC’s Port Arthur re­fin­ery, the nation’s largest — are grad­u­ally com­ing back on­line, help­ing boost crude de­mand.

At the same time, the Paris­based IEA said on Wed­nes­day it ex­pects global de­mand to climb this year by the most since 2015 while the Or­gan­i­sa­tion of Petroleum Ex­port­ing Coun­tries and its part­ners were said to be dis­cussing an ex­ten­sion of its deal to cut out­put be­yond its March ex­pi­ra­tion.

“Peo­ple are look­ing for the price to go ahead and set­tle above $50 a bar­rel, but they need some more than just the cur­rent news,” Michael Lynch, pres­i­dent of Strate­gic En­ergy & Eco­nomic Re­search in Winch­ester, Mas­sachusetts, said by tele­phone. “We need a cou­ple good in­ven­tory re­ports or per­haps some bear­ish sup­ply data from Libya or from the US shale patch.”

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