NEW YORK (Reuters) – Oil prices rose on Monday as key U.S. refineries began restarts following Hurricane Harvey, which may help revive crude oil processing, while fuel prices fell as Hurricane Irma is likely to clip demand for gasoline and diesel.
The possibility of an extension to the 15-month production pact between members of the Organization of the Petroleum Exporting Countries and non-OPEC producers also helped to support prices, traders said.
Brent crude oil futures settled up 6 cents, or 0.1 percent, to $53.84 a barrel while U.S. West Texas Intermediate crude rose by 59 cents, or 1.2 percent, to $48.07.
Hurricane Irma knocked out power to over 7.3 million in Florida, Georgia, South Carolina and Alabama, according to state officials and utilities on Monday. That has raised concerns about demand, as storms tend to cut down on driving, particularly as many cars have been destroyed.
Both U.S. product futures ended lower – gasoline dropped 0.7 percent and heating oil fell 1.4 percent.
Harvey is still likely to be a bigger driver for the crude market, analysts at Goldman Sachs said. A quarter of U.S. refining capacity to be taken off-line due to the hurricane, sapping demand. Refining runs on the U.S. Gulf Coast hit a record low in the week to Sept. 1, just after the storm, due to shutdowns.
“While some are concerned about the demand side [from Irma] I don’t think it’s that big a situation,” said James Williams, president of energy consultant WTRG Economics, noting that Harvey had more of an impact on crude, “The demand for crude is going to be set by the refineries coming back online.”
Many U.S. Gulf Coast refineries were restarting, including the largest U.S. refinery. Motiva Enterprises on Monday restored the 325,000 barrel per day (bpd) crude distillation unit at its Port Arthur, Texas, refinery to minimum production levels, sources said.
Saudi Arabia’s Energy Minister Khalid al-Falih met his Venezuelan and Kazakh counterparts at the weekend to discuss an extension of the deal to cut production by about 1.8 million bpd until March 2018 by at least three months, the Saudi energy ministry said.
On Monday, Falih and his United Arab Emirates counterpart also agreed to consider an extension beyond March.