Oil prices rise amid sharp decline in USA output

Gladys Abbott
September 13, 2017

Meanwhile, futures, the benchmark for oil prices outside the USA, tacked on 27 cents, or roughly 0.5%, to $54.05 a barrel.

Additionally, in response to the impact of Harvey which hit the Gulf Coast of Texas on August 25, the EIA said USA oil refinery utilization rates slumped 16.9 percentage points to 79.7 percent last week, the lowest rate since 2010.

October West Texas Intermediate crude traded down 95 cents, or 1.9% at $48.14 a barrel on the New York Mercantile Exchange.

Motiva restarted its huge refinery today in Port Arthur to minimum production levels after being closed since Aug 30.

USA crude prices tumbled down more than 3 percent on Friday worries that energy demand would be hit hard as Hurricane Irma, one of the most powerful storms in a century, headed toward Florida and the Southeast. For the week, however, it traded about 1.7% higher, aiming for its first weekly gain in six weeks. Brent crude was down 71 cents, or 1.3 percent, to $53.78 a barrel after reaching its highest level since April at $54.87.

While refineries, pipelines and offshore platforms resume operations after Harvey, another Atlantic hurricane, known as Irma, is approaching the United States coast and is set to hit Florida tomorrow.

If last Friday's sell-off is any indication, crude oil prices are likely to be under pressure this week as investors react to the impact of Hurricane Irma on near-term demand for gasoline and crude oil.

More news: European Stocks Gain Traction Amid Relief Rally as Hurricane Irma Weakens

Gulf Coast imports dropped by 41% last week to 1.48 million barrels a day, the lowest volume since at least January 1990, according to a report from the Energy Information Administration on Thursday.

USA crude had declined by roughly 3% on Friday, further widening the spread with Brent to over $6.

Brent prices, meanwhile, slipped back, but held ground near a 5-month high as they continue to find support from higher refinery demand in Europe and Asia.

Meanwhile, Saudi Arabia-the world's largest exporter of crude oil-said Sunday that the country's energy minister and his Venezuelan counterpart had discussed the possibility of extending OPEC's oil output cut deal beyond the March 2018 expiration date.

The Organization of the Petroleum Exporting Countries, of which Saudi Arabia is the largest member, and 10 other producers including Russian Federation first agreed late a year ago to cap their production at around 1.8 million barrels a day lower than October 2016 levels.

Phil Flynn, a senior market analyst for the PRICE Futures Group in Chicago, said in response to emailed questions, that Trump supported a strong dollar on the campaign trail, but appears to favor a weaker currency as president in order to support USA exports.

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