Oil rises as IEA sees higher oil consumption

Source U.S. Energy Information Administration Weekly Petroleum Status Report

Source U.S. Energy Information Administration Weekly Petroleum Status Report

Gasoline surged and oil was steady as flooding from Tropical Storm Harvey inundated refining centers along the Texas coast, shutting more than 10 percent of USA fuel-making capacity. Colonial connects 29 refineries and 267 distribution terminals and carries up to 2.5 million b/d of gasoline, diesel, and jet fuel from Houston to as far north as New York Harbor.

The assessment echoed a report by the Organization of Petroleum Exporting Countries forecasting higher demand for its oil in 2018 and pointing to signs of a tighter global market.

The IEA's stronger demand estimates have helped lift oil prices, Matthew Beck, managing director of a $8-billion oil and natural gas bond and private-equity portfolio at John Hancock Financial Services Inc.in Boston, said by telephone.

The agency said global oil supply dropped 720,000 barrels a day last month from July, to 97.7 million barrels a day, largely due to civil unrest in Libya and disruptions to US production due to Hurricane Harvey. One option that OPEC and its allies are considering is a six-month extension to supply curbs from the end of March, according to a person familiar with the matter.

Compliance with the cartel's deal to reduce production was 94 percent in August, up from a revised 85 per cent in July.

Brent crude LCOc1 fell 11 cents to $54.16 a barrel, while the West Texas Intermediate (WTI) CLc1 dropped 5 cents to $48.18, reported Reuters.

Source U.S. Energy Information Administration Gasoline and Diesel Fuel Update
Source U.S. Energy Information Administration Gasoline and Diesel Fuel Update

Phil Flynn, senior market analyst at Price Futures Group, said the weekly drop was the largest in history and that the storms were to blame. Total volume traded was about 13% above the 100-day average.

By 1021 GMT, worldwide benchmark Brent crude was up 27 cents, or 0.5 percent, at $54.54 a barrel. "And yet this is hardly likely to happen", it said, saying Opec states Libya and Nigeria had not agreed to production cuts.

Hurricane Harvey caused substantial disruptions to crude oil and petroleum product supply chains and increased petroleum product prices. "Depending on the pace of recovery for the US refining industry post-Harvey, very soon OECD product stocks could fall to, or even below, the five-year level".

The American Petroleum Institute said that crude stockpiles in the U.S. increased by 6.2 million barrels in the week ending 8 September to 468.8 million, almost double from the analysts' expectations.

Crude oil inventories rose by a smaller-than-expected 5.9 million barrels in the September 8 week to 468.2 million, 2.5 percent below their level a year ago, the Energy Information Administration (EIA) said in its weekly report Wednesday. "We expect crude prices to be stuck in somewhat of a holding pattern until we have Gulf Coast refineries brought back to full capacity". Cushing, Oklahoma supplies rose by the most since March, while oil production climbed by the most since 2012.

Royal Dutch Shell Plc has handed control of operations at Iraq's Majnoon oil field over to the government following changes to how it was paid for production.

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