Oil steady as Irma heads for Florida, Saudi Arabia cuts supply
LONDON (Reuters) – Oil prices steadied on Friday after almost 7 days of sharp rises as Hurricane Irma, probably the most powerful storms in a century, drove towards Florida after tearing in the Caribbean.
Irma is definitely the second major hurricane to approach america into two weeks and it has already killed 14, flattening whole islands. Its predecessor, Harvey, shut 25 % of U.S. refineries and eight percent of U.S. oil production.
"Hurricanes could have a lasting affect on refinery and industry demand," said Eugen Weinberg, head of commodities research at Commerzbank (DE:CBKG) in Frankfurt. "The outcome within the forces of nature on U.S. oil production mustn’t be overestimated – nor should their impact on demand be underestimated."
Brent crude (LCOc1) was up 16 cents at $54.65 a barrel by 1145 GMT, after earlier reaching its highest level since April at $54.80. U.S. light oil (CLc1) was 14 cents lower at $48.95 barrel.
Brent found some support from news that Saudi Arabia will cut oil supply allocations towards the customers worldwide in October by 350,000 barrels a day (bpd).
U.S. crude prices fell caused by low refining activity following Harvey, which sharply reduced interest on oil to process, traders said.
Harvey's impact has also been felt in oil production. U.S. oil output fell by almost 8 percent, from 9.5 million barrels per day (bpd) to eight.8 million bpd, in line with the Energy Information Administration (EIA).
But the slowdown in refining and output ought to be temporary.
"Most refineries are restarting and we expect a near-full recovery by month-end," U.S. investment bank Jefferies said.
Port and refinery closures on the Gulf coast and harsh sea conditions while in the Caribbean also have affected shipping.
"Imports (of oil) to the U.S. Gulf Coast fell to levels not seen since the 1990s," ANZ bank said.
It normally takes weeks with the U.S. petroleum industry to revisit full capacity, analysts say.
Hurricane Irma hit tobago and Haiti on Friday, heading for Cuba along with the Bahamas. It absolutely was predicted to achieve Florida by Sunday.
The U.S. National Hurricane Center (NHC) asserted Irma was a Category 5 hurricane, with wind speeds of 160-185 miles per hours (260-295 km/h).
On Irma's heels, Hurricane Jose is at risk of the Caribbean Leeward islands, who have recently been devastated by Irma, with wind speeds of 120 mph (195 km/h).