Oil Holds Gains Near $48 as Irma Weakens While Refining Rebounds

Oil Holds Gains Near $48 as Irma Weakens While Refining Rebounds

Oil Holds Gains Near $48 as Irma Weakens While Refining Rebounds

"At this point, there is an expected hit to gasoline demand from Hurricane Irma in Florida, but we are hearing that the infrastructure isn't as bad off as feared", said John Kilduff, a partner at Again Capital LLC, a New York-based hedge fund, in a telephone interview. Irma made a landfall in Florida on Sunday and is barreling through the state to the northwest. By Monday morning, it had weakened to a tropical storm, heading towards Georgia.

Vanguard survey of crude oil markets showed that the price of Brent which is usually used to benchmark the prices of other crudes stood at $54.30 per barrel yesterday.

Brent crude, the global benchmark for oil, settled just higher, despite Saudi Arabia and the United Arab Emirates saying they were open to extending production cuts for the Organization of the Petroleum Exporting Countries (OPEC) when the cartel's deal with Russian Federation and other global producers to reduce 1.8 million barrels per day expires in March 2018.

And U.S. export terminals were badly affected by the storm which cut crude exports to just 153,000 barrels per day in the week ending on Sept.1 compared with 902,000 bpd the week before.

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Commenting on the impact on oil production of hurricane Harvey, OPEC said "the USA energy industry appears to be rebounding quickly".

"It's hard to know at this point, but Harvey and Irma have likely caused a combined $150 billion to $200 billion in damage to Texas and Florida", Zandi said in a statement Monday.

"Irma will have a negative impact on oil demand but not on oil production or processing", Goldman analysts said in a note, Oil Price reported.

"It is clear that the rebalancing process is underway, supported by the high conformity levels of OPEC member countries and participating non-OPEC countries to the production adjustments" in the cooperation agreement, OPEC secretary general Sanusi Barkindo said in a speech in Oxford on Monday.

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The world demand for oil in 2018, as expected by OPEC, will be 1.35 million barrels per day higher than in the current year, and amount to 98.12 million barrels.

The market is also watching closely for US inventories data in the wake of recent storms. The American Petroleum Institute releases its own weekly inventory report late Tuesday. The storm hit just over two weeks after Hurricane Harvey hobbled the U.S. Gulf Coast refining sector, knocking almost a quarter of its capacity offline.

Both ministers agreed that the extension of the Vienna agreement on output cuts after March 31, 2018, would be discussed at the right time, as per the needs of the market fundamentals.

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