Goldman Sachs Expects Hurricane Irma to Hurt Oil Demand

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Late in the week, oil futures traded mixed, with Brent rising to a 5-1/2 month high while US crude slipped on a bigger-than-expected crude stock build as the restart of USA refiners after Hurricane Harvey was countered by the threat of Hurricane Irma.

Investors and analysts were waiting to see Hurricane Irma's impact on (http://www.marketwatch.com/story/hurricane-irma-downgraded-to-category-4-but-remains-extremely-dangerous-on-its-path-to-florida-2017-09-08) oil demand and potential disruptions to energy transportation in the Gulf Coast in the coming days.

Oil prices fell on Friday as Hurricane Irma drove towards US state of Florida.

OPEC's secretary-general Mohammad Barkindo said on Monday the supply cut deal was expected to help the global oil market rebalance and strong demand could further reduce oil inventories.

Two weeks after Storm Harvey made landfall on the Texas coast, knocking out a quarter of USA oil refining capacity, oil prices continued to come under pressure as refineries have been slow to restart, weighing on demand for crude oil, the primary input at refineries. Prices slid $1.61 to close at $47.48 on Friday, the most since July 5.

It comes on the heels of Hurricane Harvey, which struck the U.S. oil hub of Texas two weeks ago, knocking out a quarter of the nation's refineries, many of which are now restarting operations.

Brent for November settlement fell 17 cents, or 0.3 percent, to $53.61 a barrel on the London-based ICE Futures Europe exchange.

The deal to curb output brought crude prices above $58 a barrel in January but they have since slipped back as the effort to drain global inventories and stabilize the oil market has taken longer than expected.

After cutting seven rigs in August, the first monthly reduction since May 2016, drillers cut three oil rigs in the week to September 8, bringing the total count down to 756, energy services firm Baker Hughes energy services firm said.

The U.S. government's Energy Information Administration said U.S. crude stockpiles rose by 4.6 million barrels last week, marking the first weekly inventory build in ten.

Hurricane Irma hit Florida on Sunday, September 10, leading to electricity shutting down for 4.5 million customers.

Next week, the market will see monthly reports from the Organization of the Petroleum Exporting Countries and the International Energy Agency on Tuesday and Wednesday, respectively. The US Department of the Interior's Bureau of Safety and Environmental Enforcement said that roughly 13.5 percent of oil production in the Gulf of Mexico was also shut in on August 31.

Similarly, Hurricane Irma could lead to a drop in crude oil refinery demand in the short term.

Harvey's impact was also felt in oil production. Motiva Enterprises on Monday restored the 325,000 barrel per day (bpd) crude distillation unit at its Port Arthur, Texas, refinery to minimum production levels, sources said.

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