API: US crude oil stocks rise 6.2 mln bbls in week

Cornelia Mascio
Settembre 13, 2017

Weekly US inventories data will be able to shed some light on the hurricanes' impact. "If the Harvey impact was potentially and possibly short-term bullish for oil prices the same can not be said about Irma", PVM analyst Tamas Varga said in a note.

It was the first fall in global production in four months.

"The market is looking for a significant build in oil inventories".

The near term action in oil prices will depend on how prolonged will be the impact of Hurricane Harvey on USA oil infrastructure. We have factored in 40% current utilisation rates at the country's largest refinery in the process of restarting since late last week, Motiva's 603,000 b/d plant at Port Arthur, and partial rates at a 270,000 b/d CDU at Shell's 340,000 b/d Deer Park refinery, which began the process of resuming operations over the past weekend. For Irma, the USA government eased some restrictions so that foreign-flagged vessels could help offset the market pressures in Florida and the surrounding areas. Gasoline prices in the U.S. have already corrected sharply after touching a two-year high earlier this month. We also saw a reduction in number of oil rigs which will further be price supportive.

The IEA revised down the global refinery throughput forecast for the third quarter of 2017 by 0.7 million bpd due to Harvey. Saudi suggested that it will export 6.6 mbpd in August, down from 7.1 mbpd in July.

In OPEC's monthly oil market report, the organization offered an update on the amount of oil production expected this year and next.

United States crude stockpiles rose more than expected last week in the wake of Hurricane Harvey, according to an industry report, although analysts have warned stocks data may not give a full picture in coming weeks because of weather diruptions.

U.S. oil inventories are back within the five-year range and are at their lowest since January 2016.

Meanwhile, gasoline stockpiles fell by 8.4 million barrels, compared with analysts' expectations for a 2.1-million-barrel drop.

OPEC and other producers, including Russian Federation, have agreed to reduce output by about 1.8 million bpd until next March in a bid to reduce global oil inventories and support oil prices.

The deal agreed late previous year helped to keep prices as high as $58 a barrel in January, but they have since sagged as global stocks have not fallen as quickly as expected. A more meaningful reduction in global inventories will be imperative for establishing a firm floor for oil prices.

Opec said inventories were falling and that an increase in the price of Brent crude for immediate delivery to a premium to that for later supplies, known as backwardation, raised hopes that a long-awaited rebalancing of the market is under way.

Hurricane Harvey hit the southern coast of Texas in late August and forced the closure of several refineries and some production centers in the region.

Oil prices are weighed down by concerns the world has reached the limits of demand, which is crippling valuations more than the threat from electric cars and national policies geared at banning vehicles running on gasoline and diesel in the future, according to RBC's chief commodities strategist.

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