32.9 C
Karachi
Thursday, March 28, 2024
- Advertisement -
 

Oil claws back some losses; US crude set for steepest fall in a year

TOP NEWS

Reuters
Reuters
Reuters is an international news organisation owned by Thomson Reuters

AMSTERDAM: Oil prices rose 1 percent on Thursday, clawing back some of the losses made a day earlier, but US crude is on track for the steepest monthly losses in more than a year on demand concerns after floods knocked out a quarter of US refining capacity.

Prices also rallied in the oil products markets, with US gasoline futures RBc1 hitting a two-year high above $2 a gallon, buoyed by fears of a fuel shortage just days ahead of the Labor Day weekend that typically brings a surge in driving.

Hurricane Harvey, which brought record flooding to the US oil heartland of Texas and killed at least 35 people, has paralysed at least 4.4 million barrels per day (bpd) of refining capacity, according to company reports and Reuters estimates.

The shutdowns also led the US government to tap its strategic oil reserves for the first time in five years on Thursday, releasing 500,000 barrels of crude to a working refinery in Louisiana.

US West Texas Intermediate (WTI) crude futures CLc1 were set to close the month down 7 percent, their steepest monthly loss since July 2016. They were trading 1.4 percent up at $46.58 a barrel at 1352 GMT.

“The current steep recovery follows yesterday’s steep drop. The sell-off was bigger than expected and we see some bargain hunting now,” said Hans van Cleef, senior energy economist at ABN Amro.

International benchmark Brent crude LCOc1 was up 58 cents, or 1.1 percent, at $51.44 a barrel. It had fallen more than 2 percent in the previous session.

Analysts at Goldman Sachs and Stifel said they expected US infrastructure outages to last several months but said it was difficult to estimate the exact damage.

Others saw potential for operational refineries to delay typical September seasonal maintenance to benefit from high prices.

“Refineries outside the affected area may delay maintenance to benefit from high processing margins,” said Commerzbank oil analyst Carsten Fritsch.

Read More: Kuwait says most of Gulf oil spill cleaned up

“Hence, the negative impact on crude oil demand and oil product supply might be less severe than feared.”

U.S. crude and product stocks, typically watched closely by oil investors because they reflect market balancing, were largely ignored this week.

U.S. commercial crude stocks fell by 5.39 million barrels last week to 457.77 million barrels, the U.S. Energy Information Administration said on Wednesday.

That’s down 14.5 percent from record levels reached in March.

At the same time, the amount of crude entered into refineries reached a record high of 17.73 million bpd, the data showed. The number is expected to have dropped dramatically this week because of infrastructure closures.

Others said the refinery closures would lead to a rise in crude inventories.

“We could see rising U.S. crude inventories in the next couple of weeks until demand from refineries recovers. But by the end of September I expect the situation to be almost back to normal,” said Frank Schallenberger, head of commodity research at LBBW.

The trend for shrinking oil stocks and expectations for a rise in global oil demand growth meant analysts polled on a monthly basis by Reuters raised their oil price forecasts for the first time in six months.

- Advertisement -
- Advertisement -
 

POLL

Will the PML-N led govt be able to steer Pakistan out of economic crisis?

- Advertisement -
 

MORE STORIES