Oil prices rise as focus falls on new hurricane

Oil prices rose yesterday as strong global refining margins and the reopening of US Gulf Coast refineries provided a more bullish outlook after sharp drops due to Hurricane Harvey.

Oil prices rise as focus falls on new hurricane

However, traders were wary of Hurricane Irma, rated the most powerful Category 5 storm, which was closing in on the Virgin Islands and headed towards Florida at the weekend, raising concerns that it could knock out a major demand centre and cause more fuel shortages.

Brent gained 65c to $54.03 a barrel at one stage and US West Texas Intermediate crude futures were up 60c at $49.26 a barrel.

“Everyone is just grappling with the spate of storms that are populating the Gulf,” said John Kilduff, a partner at Again Capital.

Many refineries, pipelines and ports that were shut due to Harvey 10 days ago are restarting.

Earlier this week, about 3.8 million barrels per day of refining capacity, or 20% of the US total, was shut. This compares with 4.2 million barrels per day at the height of the storm.

Phillips 66 began restarting its Sweeny, Texas refinery, and expects the plant to be at full production by mid-September.

“Refineries coming back online is putting a squeeze on supplies in the Gulf,”said Kilduff.

Oil terminals and distributors in Florida are tracking the storm, which could curtail fuel shipments to the state, which is largely dependent upon waterborne deliveries of petrol and diesel.

Around 250,000 barrels per day of refining capacity in the Dominican Republic and Cuba lies in the immediate path of Irma, data showed.

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