Oil prices up slightly on Friday
Oil prices rose on Friday on a falling US dollar, declining rig count and concerns over Hurricane Harvey’s impact on US Gulf Coast refining and oil operations.
By 1:47 p.m. EDT, Brent crude was up 14 cents to $52.18/barrel and US WTI rose by 26 cents to $47.69/barrel.
Hurricane Harvey should make landfall by late Friday or early Saturday and is expected to be a category three storm, out of a possible grade of five, by the time it hits land.
Brock Long, director of the Federal Emergency Management Agency warns “Texas is about to have a very significant disaster,” and the National Weather Service says Harvey could leave wide swaths of South Texas “uninhabitable for weeks or months.”
Refineries, terminals, production platforms and other infrastructure have either shuttered operations or are in preparation to close up for the duration of the storm which is expected to dump up to 36 inches of rain in some areas.
A little less than 10 per cent of offshore US of Mexico oil output capacity and about 15 per cent of natural gas production was stopped by midday, Thursday. Some onshore drilling companies in south Texas have also halted drilling and the Port of Corpus Christi is now closed to vessel traffic, according to the city’s Port Authority.
Gulf Coast conventional cash gasoline prices for shipment on the Colonial Pipeline hit a near three-year high, according to Reuters.
“The inmates are running the asylum in gasoline and distillate with cracks and spreads up strongly as the latest forecasts show 20 inches (51 cm) of rain for the Corpus to Houston area of Texas,” Scott Shelton, broker at ICAP told Reuters.
“Wind and rain and the unknown effects of both generate a ’Get me flat’ mentality in futures and the cash markets which has resulted in strength in both.”
The US dollar fell against other currencies on Friday after Federal Reserve Chair Janet Yellen did not reference US monetary policy during a speech at the annual central bank research conference in Jackson Hole. The drop in the value of the greenback makes oil purchases cheaper for those using other currencies.
Also impacting oil prices was Baker Hughes data showing the US gas and oil rig count was down this past week by a total of 6 and now stands at 940, up 451 from this time last year.
