Futures flat as Hurricane Harvey weighs on oil, dollar

Paterniano Del Favero
Agosto 29, 2017

There may also be around 300,000 bpd of onshore US production shut in, trading sources said.

The uncertainty pushed investors toward safe-haven assets, with U.S. Treasuries holding steady ahead of the employment data on Friday, while gold rose to its highest in more than a week.

As a result, the discount of US WTI versus Brent surpassed $5 per barrel, its widest in more than two years.

Refineries in Europe and Asia were already gearing up to replace the lost oil products, while the International Energy Agency said it could release emergency oil stocks in the event of extended outages.

The Gulf of Mexico alone accounts for 20 percent of U.S. production.

"Given that a significant portion of refining capacity in the US Gulf Coast is shut, we are likely to witness a situation of high domestic crude stockpiles, which will put pressure on prices", Amit Musaddy of energy consultancy Trifecta told AFP. "If those two were isolated, it would increase crude stocks by 14 million barrels a day every week and reduce gasoline and diesel stocks by 7 million and 3.5 million barrels, respectively".

About 26 percent of Gulf natural gas production is offline, or about 828 million cubic feet (23.4 million cubic meters) per day, BSEE said.

Despite this, crude remains in ample supply, resulting in low prices.

Meanwhile, putting Gulf production into further perspective, he pointed out that Harvey has caused less devastation for offshore production than Hurricane Ivan in 2004, or Hurricane Katrina in 2005.

"Shale means less vulnerability to hurricanes", said Michael Lynch, president of president of Strategic Energy & Economic Research-"but more to flooding", which can inundate refineries.

United States weather services downgraded Harvey to a tropical storm on Saturday but torrential rains have continued to drown the area and are expected to continue for most of the week.

U.S. West Texas Intermediate (WTI) crude edged down 24 cents to $46.33 after falling more than 2 percent in the previous session and trading as high as $46.96 earlier in the day.

"With differentials so high, there is a reduced incentive for exports to the US", said Jay Hatfield, portfolio manager of InfraCap's MLP exchange-traded fund.

Altre relazioni OverNewsmagazine

Discuti questo articolo