US light, sweet crude oil prices declined slightly on the New York market on Sept. 7 while Brent extended a week of steady gains. Analysts said US crude prices appeared to be stuck at pre-Hurricane Harvey levels.
A weekly inventory report showed Harvey-related refinery shutdowns and production slowdowns along the US Gulf Coast combined to cause the first US crude oil inventory gain in weeks while gasoline stockpiles experienced a draw.
Commercial crude inventories, excluding the Strategic Petroleum Reserve, rose 4.6 million bbl during the week ended Sept. 1 compared with the previous week, reported the US Energy Information Administration in its weekly oil inventory. The latest total was 462.4 million bbl (OGJ Online, Sept. 7, 2017).
“It’s still not back to full speed and that’s preventing [oil] stocks from drawing,” Ole Hansen, head of commodity strategy at Saxo Bank, said of post-Harvey refinery runs, which have slowed crude oil demand.
The Weekly Petroleum Status Report showed US oil production fell by 749,000 b/d for the week ended Sept. 1 compared with the previous week.
The latest estimated total was 8.78 million b/d of which the Lower 48 states contributed 8.28 million/d, down 783,000 b/d from the previous week. Alaska showed a week-to-week production gain of 34,000 b/d to 494,000 b/d for the week ended Sept. 1.
Barclays Research noted a trend in the widening futures spread between Brent and the US oil benchmark prices, which it attributed to temporary refining and export infrastructure shutdowns from Hurricane Harvey.
“Hurricane Harvey is likely to fuel bullish market sentiment through the first half of September,” Barclays analysts Michael Cohen and Warren Russell said in a recent research note.
“Prices have received welcome support as the physical market has tightened over the summer, staying range-bound in the $48-52/bbl range,” Cohen and Russell said. “We continue to believe that prices are likely to average higher in the second half of the year than in the first half.”
The Organization of Petroleum Exporting Countries and other major producers previously extended production-cut targets of 1.8 million b/d through March 2018. Analysts say world oil inventory levels will reflect OPEC’s production cuts because low oil prices stimulate crude oil demand.
Meanwhile, investors and analysts wait to see how Hurricane Irma might affect US production in the Gulf Coast in the coming days.
Energy prices
The October light, sweet crude contract on the New York Mercantile Exchange declined 7¢ on Sept. 7 to settle at $49.09/bbl while the November contract fell 9¢ to settle at $49.53/bbl.
The NYMEX natural gas price for October fell nearly 2¢ to $2.98/MMbtu. The Henry Hub cash gas price was down 5¢ to $2.88/MMbtu.
Heating oil for October gained 2.6¢ to a rounded $1.79/gal. The NYMEX reformulated gasoline blendstock for October was down 1¢ to settle at a rounded $1.66/gal on Sept. 7.
The Brent crude contract for November on London’s ICE declined 29¢ to $54.49/bbl. The December contract increased 20¢ to $54.33/bbl. The gas oil contract was $526/tonne on Sept. 7, up $3.75.
OPEC’s basket of crudes for Sept. 7 was $52.04/bbl, down 44¢.
Contact Paula Dittrick at [email protected].
