Oil slowed a fourth weekly decline as traders braced for impact from Hurricane Harvey that moved through the Gulf of Mexico toward a US refining hub. Gasoline futures surged to the highest in four months.
Front-month crude futures rose 0.7 percent in New York, paring Thursday’s 2 percent decline. Gasoline gained as much as 4 percent. While some oil and gas production has shut in the Gulf, the storm is bearing down on an area in the US state of Texas that is home to much of the nation’s refining capacity. If Harvey, currently a Category 2, makes landfall as a Category 3, it will be the strongest storm to hit since Wilma in 2005.
Oil in New York has lost almost 5 percent this month as investors weigh rising global output against supply cuts by members of the Organization of Petroleum Exporting Countries and its allies. US gasoline prices surged as Harvey moved closer to the coast and Citigroup Inc. estimates more than 2 million barrels of motor fuel output may be impacted by the storm.
“The market initially took a bit of negative view on the hurricane in terms of the impact on refineries, but there are reports of platform closures, so the tune has changed slightly and prices are supported,” said Daniel Hynes, an analyst at Australia & New Zealand Banking Group Ltd. “The underlying issues that have been affecting the market are still there, which is falling crude inventories, but rising oil output in the US.”
West Texas Intermediate for October delivery was at $47.76 a barrel on the New York Mercantile Exchange, up 33 cents, at 1:25 p.m. in Hong Kong. Total volume traded was about 17 percent above the 100-day average. Front-month prices are down 1.6 percent this week.
US gasoline prices for September rose to $1.7303 a gallon, the highest intraday price for a front-month contract since April. Ultra-low-sulfur diesel climbed as much as 2 percent to $1.6530 a gallon.
Brent for October settlement gained 38 cents, or 0.7 percent, to $52.42 a barrel on the London-based ICE Futures Europe exchange. Prices are down 0.6 percent this week. The global benchmark crude traded at a premium of $4.66 to WTI.
Gulf Coast refineries in the path of the storm process almost 5 million barrels of oil a day. So far, two refineries and a condensate splitter in Corpus Christi are shutting, with about 500,000 barrels a day of capacity. One refinery in Houston reduced rates and another abandoned an attempt to restart a unit.
Oil-market news:
OPEC’s Joint Ministerial Monitoring Committee, which oversees implementation of cuts, plans to invite Nigeria and Libya to gatherings in Vienna next month, the group’s secretariat said in a statement.