Oil prices flat despite OPEC production drop
As some refineries shut down by Hurricane Harvey began to restart on Friday, oil prices fell slightly in trading and gasoline futures were down.
Brent crude was down by 20 cents to $52.66/barrel by 12:33 p.m. EDT and US WTI fell by 9 cents to $47.14/barrel.
On Thursday, US gasoline prices hit a two-year high at over $2/gallon, but as two Houston refineries began restart operations, the “crack spread” fell nearly 11 per cent and gasoline futures dropped by nearly 5 per cent.
Hurricane Harvey has been downgraded to a tropical storm and is moving inland. The death toll from Harvey is now at over 40 people and record flooding from the massive storm shut down about one-quarter of the US refining capacity, or at least 4.4 million barrels per day (b/d).
“The good news for consumers is that it seems some of the units are in the process of getting back in operation,” John Kilduff, partner at energy hedge fund Again Capital LLC told Reuters. He added that the news was underpinning crude prices. “You can see the light at the end of the tunnel.”
Marathon’s Galveston Bay Refinery in Texas City, Texas is producing 45 per cent of its 459,000 b/d capacity, according to Reuters’ sources. Citgo Petroleum reports that it is beginning to restart its 157,500 b/d refinery in Corpus Christi.
OPEC reported it had reduced its crude exports in August to 25.897 million b/d, with all but five OPEC members reducing their shipments abroad. Saudi Arabia held true to its promise to cut its exports in August to 6.6 million b/d.
Exceptions to the OPEC export reductions were Algeria, Angola, Iran Kuwait and Nigeria. Both Nigeria and Iran saw the highest daily export rated year-to-date.
In its weekly rig count, Baker Hughes reported the US rig count is up 3 rigs from last week and now sits at 943. The increase is all in gas rigs, there are no new oil rigs, according to the giant oilfield services company.
Baker Hughes adds that “Due to the impact of Hurricane Harvey on South Texas this week, we could not verify the change in rig counts across 47 counties in South Texas, with the exception of one rig moving out of Dimmit County. Therefore, we’re reporting the same counts as last week, minus the one rig that has been accounted for, totalling 87 rigs across the 47 counties.”
In Canada, the rig count is down by 16 to 201. There are 13 less oil rigs and three fewer gas rigs. 