Published: Wed, September 13, 2017
Business | By Max Garcia

Oil Prices Drop On Demand Worries After US Hurricanes

Oil Prices Drop On Demand Worries After US Hurricanes

The IEA also said the impact from Hurricane Harvey on USA oil markets in the Gulf Coast was easing and its impact on global markets was likely to be relatively short-lived, although it would possibly help inventories rebalance more quickly. The American Petroleum Institute releases its own weekly inventory report late Tuesday. Much of that refining capacity has now been restored, with the largest single refiner in the country, Motiva, having resumed full production at its 325,000-bpd plant in Port Arthur, Texas, as of Monday, according to sources quoted by Reuters.

The excess oil revenue of the nation which has $44 per barrel as its budget 2017 reference price was $5 per barrel in August when crude oil price hovered at $49 per barrel. Though the prospect of an extension has again grabbed headlines in the latest news reports about the discussions between Saudi Arabia, Venezuela, the UAE and Kazakhstan on the sidelines of an event in the Kazakh capital of Astana, we don't see any impact on sentiment in the oil market.

On Tuesday the Organization of the Petroleum Exporting Countries in its monthly report said its production fell for the first time since April.

Market players will also focus on weekly data from the USA on stockpiles of crude and refined products to weigh what the impact of recent storm activity was on supply and demand.

Brent crude rose 53 cents or 0.9 percent to $54.37 per barrel by 11:56 a.m.(1556 GMT). But the EIA also reported that total domestic crude output rose by 572,000 barrels a day to 9.35 million barrels. Hurricanes in the US, rising tensions with North Korea and dovish comments from fed speakers are all adding pressure. "Due to the demand-focused impact of Irma, we find that, by the end of September, gasoline and distillate stocks respectively are only -8 million barrels and -13 million barrels lower respectively than they otherwise would have been".

"Based on recent bets made by investors, expectations are that markets are tightening and that prices will rise, albeit very modestly", the agency said.

Oil prices are weighed down by concerns the world has reached the limits of demand, which is crippling valuations more than the threat from electric cars and national policies geared at banning vehicles running on gasoline and diesel in the future, according to RBC's chief commodities strategist.

Mohammed Barkindo, Opec's Secretary-General, said on Monday that the deal to cut supply would help the market rebalance and strong demand could further reduce oil inventories. Discussions have included one option for a six-month extension, one person said.

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