US Oil Slides 3% As Irma Threatens Demand
NEW YORK, Sept 8 (Reuters) - U.S. 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.
Irma, the second major hurricane to approach the United States in two weeks was forecast to slam southern Florida on Sunday. It has already killed 14 and destroyed islands in the Caribbean, with Hurricane Jose heading for the Caribbean Leeward islands, close on the heels of Irma.
Its predecessor, Harvey which hit Texas on Aug. 25, shut a quarter of U.S. refining capacity, sharply reducing demand for crude that sent prices slumping.
As of Thursday, about 3.8 million barrels of daily refining capacity, or about 20 percent, was still shut in and it will take weeks for the U.S. petroleum industry to return to full capacity, analysts said.
In the case of Irma, analysts are more worried that devastation wrought by the storm could sharply reduce demand for energy.
U.S. crude settled down $1.61, or 3.3 percent, at $47.48 a barrel. 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.
Brent ended the week up 1.9 percent while U.S. crude was up 0.4 percent, paring most of its earlier weekly gains on worries on the continued impact of hurricanes on demand and supply.
"Hurricanes can have a lasting effect on refinery and industry demand," said Eugen Weinberg, head of commodities research at Commerzbank in Frankfurt.
Exxon Mobil Corp's 362,300-barrel-per-day (bpd) Beaumont, Texas, refinery which shut on Aug. 30 due to flooding, may remain closed until the first week of October, sources familiar with plant operations said.
U.S. crude production output fell almost 8 percent because of Harvey, from 9.5 million barrels per day (bpd) to 8.8 million bpd, according to the Energy Information Administration (EIA). <C-OUT-T-EIA>
Irma, however, was not expected to affect supply as it was headed away from U.S. oil production in the Gulf.
"Irma looks like it will miss the key Gulf areas, and we're more worried about shale," said Mark Watkins, regional investment manager at U.S. Bank.
Port and refinery closures along the Gulf coast and harsh sea conditions in the Caribbean have hit shipping.
"Imports (of oil) to the U.S. Gulf Coast fell to levels not seen since the 1990s," ANZ bank said.
View Full Article
WHAT DO YOU THINK?
Generated by readers, the comments included herein do not reflect the views and opinions of Rigzone. All comments are subject to editorial review. Off-topic, inappropriate or insulting comments will be removed.