Oil steady as U.S. producers, refiners avoid worst of storm

Fri Aug 28 2020
Mark Cooper (3135 articles)
Oil steady as U.S. producers, refiners avoid worst of storm

Oil prices inched higher on Friday, clawing back narrow losses earlier in the session as a massive storm raced inland past the heart of the U.S. oil industry in Louisiana and Texas without causing any widespread damage to refineries.

Brent crude LCOc1 futures for October, set to expire on Friday, rose 5 cents to $45.14 a barrel as of 0628 GMT, heading for a 1.8% weekly gain. The more active November contract LCOc2 climbed 7 cents to $45.67.

U.S. West Texas Intermediate (WTI) crude CLc1 futures were up 1 cent to $43.05 a barrel. The contract is on track to rise 1.7% rise this week, for a fourth straight week of gains.

“With the U.S. Gulf hurricanes out of the way and preliminary assessment showing no damage to the upstream or downstream facilities, crude has surrendered most of the storm premium and could enter a holding pattern again,” said Vandana Hari, oil market analyst at Vanda Insights.

Hurricane Laura hit Louisiana early Thursday with winds of 150 miles per hour (240 km per hour), damaging buildings, knocking down trees and cutting power to more than 650,000 people in Louisiana and Texas, but refineries were spared from feared massive flooding.

But investors are shifting their concerns from production outages to demand destruction, analysts said.

“Crude prices have barely budged this week, but refining margins have been hammered as flash floods disrupt normal consumption patterns, likely for a longer period of time than (Gulf of Mexico) production remains offline,” said RBC Capital in a note.

U.S. producers had shut 1.56 million barrels per day (bpd) of crude output, or 83% of the Gulf of Mexico’s production, while nine refineries had shut around 2.9 million bpd of capacity, or 15% of U.S. processing capacity, ahead of the storm.

Mark Cooper

Mark Cooper

Mark Cooper is Political / Stock Market Correspondent. He has been covering Global Stock Markets for more than 6 years.