Friday, 24 November, 2017

USA oil slides 3% as Irma threatens demand

WTI Crude Oil Weekly October WTI Crude Oil
Preston Stone | 12 September, 2017, 00:55

The value of the US dollar is having more of an impact on oil markets than the OPEC effort to trim production, the head of Russian oil company Rosneft said. However, the latest oil market report from OPEC showed that production increased by 173,000 barrels per day in July, after rising by 396,000 barrels in June and by 366,000 barrels per day in May, thanks largely to two exempted countries, Libya and Nigeria.

USA crude for October delivery CLc1 was up 39 cents, or 0.8 percent, at $47.87 a barrel by 0409 GMT, having tumbled 3.3 percent on Friday.

A briefing from currency trader XE said Friday the dollar is under pressure from hurricane threats to the U.S. mainland and geopolitical tensions with North Korea, U.S. economic policy notwithstanding.

Among refined products, October gasoline lost 1.3 cents, or 0.8%, to $1.635 a gallon, while October heating oil settled at $1.743 a gallon, down 2.3 cents, or 1.3%.

Igor Sechin, the head of Russian oil producer Rosneft, said a decline in the value of the USA dollar was having a greater market impact than the effort by the Organization of Petroleum Exporting Countries to balance the market with coordinated production declines.

Oil rose as Irma weakened to a tropical storm after hitting Florida, while Gulf Coast refining continued to recover following storm Harvey.

Brent Crude Oil
Weekly December Brent Crude Oil

Even so, data released after market settlement by the Commodity Futures Trading Commission showed hedge funds and other money managers have raised their bullish bets on WTI by more than 20,500 contracts for the week ended Sept 5. after slashing those positions by 105,000 contracts in the previous week to August 29 after Hurricane Harvey.

Global benchmark Brent crude futures, the benchmark for oil prices outside the US, fell 0.30% to $53.62 a barrel.

The value of the US currency has moved lower for much of the year.

Late in the week, oil futures traded mixed, with Brent rising to a 5-1/2 month high while USA crude slipped on a bigger-than-expected crude stock build as the restart of US refiners after Hurricane Harvey was countered by the threat of Hurricane Irma. The global benchmark crude traded at a premium of $5.26 to November WTI.

Analysts said Brent was likely to retain its edge over WTI in the near-term based on indications Saudi Arabia will be cutting supplies again next month. The new agreement extends the production deal for nine months until March 2018. Russian Federation is a party to the effort and is cutting the most among non-OPEC members. With so many refineries shut down, there was nowhere to put crude but in storage. The deepest cuts will be to major oil companies, where supplies will be reduced by 225,000 bpd.

"Despite refiners' request for more crude, the decision was made to maintain cuts", the source said, adding that demand and refining margins in Asia were "healthy and robust". "What we have here is an unique hurricane situation that's giving Brent a pop, which otherwise isn't deserved".

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