Oil prices down slightly Friday
Oil prices remained close to five-month highs in Friday trading and were on track for their largest weekly gain since late July after the International Energy Agency forecast rising crude demand and refineries shuttered by Hurricane Harvey slowly come back online.
Benchmark Brent crude way down by 10 cents to $55.37/barrel by 1:24 p.m. EDT and US WTI was down 21 cents to $49.68/barrel.
Overall this week, Brent is up by 3.1 per cent and is on track for its third weekly gain, which would be the biggest weekly increase since the end of July. US WTI is set for a 5 per cent weekly gain.
“Prices have now advanced for the last two weeks off increased demand forecasts from both OPEC and the IEA combined with the near-term demand uplift expected as U.S. oil refineries seek to restart operations post-Hurricane Harvey,” Reuters reports analysts at Panmure Gordon said.
As US Gulf Coast oil refineries restart their operations post Harvey, oil investors are hoping demand for crude rises higher.
As of Wednesday, 13 of the 20 refineries impacted by the deadly storm were at or near normal operating rates. Five more were restarting or ramping up operations, according to IHS Markit.
Motiva Enterprises said on Wednesday that its Port Arthur, Texas refinery, the largest in the United States was operating at half its full capacity.
Analysts at HSBC say that despite the 2017 outages, this year is set to be “extremely strong” for oil demand growth.
“We remain convinced of longer-term upside to crude prices. With the lack of new major project sanctions, we expect conventional non-OPEC supply to start declining post-2018,” they said.
According to Reuters, HSBC maintains their 2018 and 2019 Brent price assumptions at $65/barrel and $70/barrel, respectively.
On Thursday, the International Energy Agency released a report saying the global crude glut was shrinking, mostly due to strong European and US demand and OPEC and non-OPEC production cuts.
“This boost to the market is attracting fresh speculative length,” Gene McGillian, director of market research at Tradition Energy told Reuters.
In its weekly rig count, Baker Hughes reported the US oil rig count was down by seven to 749, which is 333 higher than this time last year. The oil and gas rig count in the United States is 936 this week.
This is the highest drop in the US rig count since January and drillers have not added any rigs since the week of Aug. 11.
In Canada, the oil rig count rose by 10 to 212 while the number of natural gas rigs was unchanged at 100. This time last year, there were 132 gas and oil rigs operational in Canada.
