Oil caps best week since July

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

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.”