NEW YORK, Aug 26 — Oil prices rose nearly 1 per cent yesterday as the dollar fell and the US Gulf Coast braced for Hurricane Harvey, on track to become the biggest storm to hit the United States mainland in more than a decade.
The dollar, in which oil is priced, fell after Federal Reserve Chair Janet Yellen made no reference to US monetary policy in her speech at the annual central bank research conference in Jackson Hole, Wyoming.
Harvey strengthened into a powerful Category 3 storm, last located about 75 miles (120 km) east-southeast of Corpus Christi, Texas, in the Gulf of Mexico and packing top sustained winds of 120 miles per hour (195 kph), the National Hurricane Centre said.
Refineries, terminals, onshore and offshore production operations and other infrastructure have shut or begun storm preparations with Harvey set to make landfall on the Texas coast on Friday night or early today.
The NHC, which has warned that catastrophic flooding was expected across portions of southern and southeastern Texas, expects Harvey to move slowly and linger over Texas for days.
Some tracking models show the storm could circle back out over Gulf waters after making landfall, and then take aim at Houston midweek, giving the nation’s four most populous city a double dose of rain and wind.
US crude futures settled up 44 cents, or 0.9 per cent, at US$47.87 (RM203.90) a barrel but down 1.3 per cent on the week.
Brent crude ended 37 cents, or 0.7 per cent, higher at US$52.41 and down 0.6 per cent on the week.
US gasoline futures pared gains and ended a shade firmer after hitting their strongest levels in four months and the highest in three years for this time of year as traders booked profits and worries over supply shortages have already been priced in, market participants said.
Gasoline crack spreads, an indicator of refining profits, plunged 6 per cent after it had surged about 12 per cent on Thursday and hit the highest level seasonally in five years earlier yesterday.
Gulf Coast conventional cash gasoline prices for shipment on the Colonial Pipeline were seen hitting a near three-year high.
“The initial loss of refining capacity would tighten the availability of petroleum products, consistent with the rally in product prices, cracks, timespreads and differentials observed this week and historically,” Goldman Sachs said in a note.
“On the demand side, gasoline typically suffers most during and after a hurricane with distillate demand supported instead by rebuilding activity.”
The US Department of Energy said it was ready to release crude oil from the nation’s emergency stockpile if needed due to the impacts of Harvey.
Energy companies have pulled workers from offshore oil platforms and halted onshore drilling in south Texas.
A little less than 10 per cent of offshore US Gulf of Mexico crude output capacity and nearly 15 per cent of natural gas production had been halted by midday on Thursday, government data showed.
Three refineries in Corpus Christi and one farther inland at Three Rivers were shutting down ahead of the storm. Two others reduced output as ports were closed.
Texas is home to 5.6 million barrels per day of refining capacity, and Louisiana has 3.3 million barrels.
Beyond the storm’s potential impact on the oil industry, crude remains in ample supply globally despite efforts led by the Organisation of the Petroleum Exporting Countries (Opec) to hold back production to prop up prices.
A joint Opec and non-Opec monitoring committee said an extension to the supply pact beyond March was possible, though not yet decided.
Part of the reason for the crude glut has been a 13 per cent jump in US output since mid-2016 to 9.53 million bpd, close to the record 9.61 million bpd hit in June 2015.
US energy firms cut oil rigs for a second week in a row according to Friday data from Baker Hughes. Drillers cut four oil rigs in the week to August 25, bringing the total count down to 759.
Hedge funds and money managers, meanwhile, trimmed their bullish bets on US crude futures and options positions for the third straight week in the week to August 22, data showed. — Reuters
Source: The Malay Mail Online