Oil weakens on fears Irma could dent United States demand

US oil futures found support following an official downgrading of Hurricane Irma's strength to Category 1, as the storm pummeled Florida over the weekend after devastating much of the Caribbean.

Irma is the second major hurricane to approach the U.S.in two weeks.

On Irma's heels, Hurricane Jose is heading for the Caribbean Leeward islands, which have just been devastated by Irma, with wind speeds of 120 miles per hour (195 km/h).

Sign up here for free access to 7 articles per month + twice daily business email alerts.

While refineries, pipelines and offshore platforms resume operations after Harvey, another Atlantic hurricane, known as Irma, is approaching the United States coast and is set to hit Florida tomorrow. Brent crude was down 71 cents, or 1.3 percent, to $53.78 a barrel after reaching its highest level since April at $54.87.

The EIA (U.S. Energy Information Administration) estimates that USA crude oil production fell 7.8% or 749,000 bpd (barrels per day) to 8.8 MMbpd between August 25 and September 1.

The EIA reported that refinery runs last week averaged 14.5 million barrels of crude, a decline from 17.7 million bpd the week before, when the authority also reported a 5.4-million-barrel draw in crude oil inventories.

"Hurricanes can have a lasting effect on refinery and industry demand", said Eugen Weinberg, head of commodities research at Commerzbank in Frankfurt.

Forming Government In West Bengal Would Be BJP's Ultimate Achievement: Amit Shah
Sentu Mondal and Hemen Mondal from Malda district who were allegedly attacked by TMC activists previous year during Durga Puja met Shah.

Oil prices recouped some losses on Tuesday, helped by OPEC saying its output fell in August, an indication that the production-cutting pact was helping to reduce a supply gut.

October West Texas Intermediate crude tacked on 59 cents, or 1.2%, to settle at $48.07 a barrel on the New York Mercantile Exchange after tapping a low at $47.

Additionally, in response to the impact of Harvey which hit the Gulf Coast of Texas on August 25, the EIA said USA oil refinery utilization rates slumped 16.9 percentage points to 79.7 percent last week, the lowest rate since 2010.

The price move higher also "reflects a little more confidence that the refiners are recovering", James Williams, president of London, Arkansas-based energy researcher WTRG Economics, said by telephone.

Port and refinery closures along the Gulf coast and harsh sea conditions in the Caribbean have hit shipping.

"Imports (of oil) to the US Gulf Coast fell to levels not seen since the 1990s", ANZ bank said.

Drillers cut three oil rigs in the week to September 8, bringing the total down to 756, the least since June.

Futures were little changed in NY, up 3.7% for the week. In the previous week, speculators had cut their bullish bets to a two-month low as Harvey made landfall.

Latest News