Oil Prices Set To Rise as Supply-Demand Gap Closes Up

Violet Tucker
August 31, 2017

Brent's front-month finished up $0.11, or 0.2%, at $52 a barrel on London's Intercontinental Exchange.

Petrol futures surged yesterday to another two-year high and crude oil was down, as flooding and damage from Tropical Storm Harvey shut almost a quarter of United States refinery capacity, curbing demand for crude while raising the risk of fuel shortages.

"Because that demand is gone that's where the selling pressure in the market is coming from", said Gene McGillian, manager of market research at Tradition Energy.

Refinery closures has shifted gasoline futures higher however, as it makes the product harder to come by and thus priced higher.

Flooding from Hurricane Harvey is devastating the Houston and Galveston areas of Texas, major hubs for US oil refining.

U.S. West Texas Intermediate (WTI) crude edged down 24 cents to $46.33 after falling more than 2 percent in the previous session and trading as high as $46.96 earlier in the day.

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Refinery shutdowns from the storm helped push U.S. gasoline prices to $1.7799 per gallon on Monday, the most since 2015, although they receded slightly to $1.7342 per gallon by 0648 GMT on Tuesday.

New York, Aug 29 (Reuters) - U.S. gasoline futures jumped 4 percent while crude prices were mixed on Tuesday after a hurricane shut down more than 19 percent of the country's refining capacity, curbing fuel production and further bloating crude inventories.

Preparing for more rain and floods, Total cut production to 53% of capacity at its 225,500 bpd Port Arthur refinery, reported a leading research agency.

"US gasoline prices increased by 3% at $1.8380 per gallon, the most since 31 July 2015".

On November 30, 2016, the OPEC summit was held in Vienna, where OPEC members reached an agreement on reducing oil production by 1.2 million barrels per day.

Hurricane Katrina caused significant damage to USA refinery and production capacity in the Gulf of Mexico, and forced oil prices to briefly spike to above $70 per barrel in September 2005. Jefferies bank said it was lowering its fourth-quarter Brent oil price estimates to $55 a barrel from $60 and its 2018 forecast to $57 from $64.

Other reports by Guamnewswatch

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