Oil Eases as Irma Targets Florida, Saudi Arabia Trims Supply

Oil Eases as Irma Targets Florida, Saudi Arabia Trims Supply

Brent crude futures were up 8 cents at $54.57 a barrel at 7:30AM GMT, with the benchmark for global oil prices earlier marking its highest since April at $54.79 a barrel.

West Texas Intermediate for October delivery was at US$49.08 a barrel on the New York Mercantile Exchange, down 1 cent, at 1:36pm in London yesterday.

However, the API report also showed a drop of 2.5 million barrels in gasoline stocks, while distillate stocks fell by 600,000 barrels.

Oil prices edged lower early on Thursday, after rising more than 1% to four-week high in the prior session, as investors looked ahead to weekly data from the US on stockpiles of crude and refined products to weigh what the impact of Harvey was on supply and demand.

USA energy firms cut oil rigs for a third time in the past four weeks as a 14-month drilling recovery stalled, with energy firms reducing spending plans in response to falling crude prices.

U.S. gasoline stockpiles shrank last week as refineries were shuttered as Hurricane Harvey approached the Texas coast and the offloading of imported cargoes was interrupted.

The U.S. lost more than 20% of its refining capacity in the days after Harvey (http://www.marketwatch.com/story/more-refineries-come-off-line-in-harveys-wake-2017-08-30), though many refineries have since started to come back online.

"While the fear last week was for reduced oil processing by refineries due to hurricane Harvey, the coin has now flipped", said Schieldrop.

US oil output fell nearly 8 per cent because of Harvey, from 9.5 million barrels per day (bpd) to 8.8 million bpd, according to the Energy Information Administration (EIA).

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.

"The data for this week and next will be taken with a grain of salt as the underlying trend will be obscured by the effects of the hurricane", said William O'Loughlin, investment analyst at Rivkin Securities.

It will take weeks for the USA petroleum industry to return to full capacity, analysts report.

Hurricane Irma, which has become one of the biggest storms ever measured - picking up the Twitter hashtag #irmageddon - on Friday hit the Dominican Republic and Haiti, heading for Cuba and the Bahamas.

The U.S. National Hurricane Center (NHC) said Irma was a Category 5 hurricane, with wind speeds of 160-185 miles per hours.

Two other tropical storms in the Atlantic, Jose and Katia, were declared hurricanes late on Wednesday.

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