United States oil 'rebounding quickly' after hurricanes as Opec cuts back

Marathon Petroleum Corp. oil storage tanks sit at a terminal in the Ybor Channel ahead of Hurricane Irma in Tampa Florida U.S. Sept. 9 2017

On Tuesday, oil prices dropped as the aftermath of Hurricane Irma affected demand offset refinery restarts on the heels of Hurricane Harvey. The hurricane forced refineries across the US Gulf Coast to shut down impacting almost 3.3 mbpd of refining capacity as per the EIA data released last week.

Gasoline prices had reached $2.70 a gallon in Florida in the wake of Hurricane Irma, but more than half of all gas stations in Florida cities had no gas available this morning.

The U.S. Energy Information Administration (EIA) released its weekly petroleum status report Wednesday morning, showing that U.S. commercial crude inventories increased by 5.9 million barrels last week, maintaining a total U.S. commercial crude inventory of 468.2 million barrels. According to the organisation, the supply was hampered by Hurricane Harvey in the U.S., which caused refineries to shut.

The Paris-based IEA, in its monthly report, noted that the U.S.' reliance on the Gulf Coast makes it vulnerable to similar events like Harvey, saying "normal operations are too important to fail".

"Depending on the pace of recovery for the US refining industry post-Harvey, very soon OECD product stocks could fall to, or even below, the five-year level", it said referring to Hurricane Harvey which hit the United States two weeks ago. Benchmark Brent crude rose 53 cents a barrel or almost 1 percent, to trade at $54.80.

US crude futures CLc1 added to gains late in the session, boosted by expectations that recovering refineries will process more crude.

Output by OPEC's 14 member countries fell in August by 79,000 barrels per day (bpd) from July to 32.76 million bpd.

Much of that was because of a near 10 million-barrel increase in stocks in the U.S. Gulf region and as crude production rebounded from a brief Harvey interruption. Distillate stocks fell 3.2 million barrels.

OPEC raised estimates for the amount of crude it will need to supply next year amid a stronger outlook for global oil demand. Global benchmark Brent crude LCOc1 dropped by 35 cents to $53.49 per barrel from the previous close.

USA crude settled up more than 1% on Monday, paring some of its huge discount to global oil benchmark Brent, as Hurricane Irma's initial damage on the domestic oil industry look more contained than thought.

For some petrostates, like Libya and Nigeria, this was a matter of course as they work to recover from significant supply disruptions, but for others like Ecuador it was about open defiance of a painful plan to pursue when crude is barely fetching $50 per barrel.

The global oil surplus is beginning to shrink due to stronger-than-expected European and US demand growth, as well as production declines in OPEC and non-OPEC countries, the International Energy Agency said on Wednesday. The U.S. EIA on Tuesday revised its 2017 and 2018 oil output forecasts lower.

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