Oil prices firm as US refineries re-open after Harvey
London — Brent oil prices firmed on Thursday, hovering near three-and-a-half month highs as US refiners, restarting after Hurricane Harvey, increased their crude processing and the US dollar declined.
Brent crude futures were up 39c at $54.59 a barrel by 9.21am GMT, close to their highest since May 25. US West Texas Intermediate (WTI) crude futures were up 8c at $49.24 a barrel, near a four-week high.
US Gulf Coast facilities were slowly recovering from the devastating effects of Harvey, which hammered Louisiana and Texas almost two weeks ago, shutting key infrastructure in the heart of the US oil and natural gas industry.
As of Wednesday, about 3.8-million barrels of daily refining capacity, or some 20% of the US total, was shut in, although a number of refineries, as well as petroleum-handling ports, were starting up again.
Prices also received a boost from a weakening US dollar, in which oil is priced. Because of this, a lower dollar makes it less expensive for holders of other currencies. The dollar index was down 0.39% at 91.933.
At the same time, prices were weighed down by fears that Hurricane Irma in the Caribbean could interrupt crude shipments in and out of the US, and by rising Libyan production.
Irma hit Caribbean islands overnight with wind speeds up to 295km/h and was heading for Florida, where fuel shortages were reported as retailers struggled to keep up with demand from customers filling tanks ahead of the storm’s landfall, expected this weekend.
Another Atlantic storm, Jose, is following on Irma’s heels and has been upgraded to hurricane strength by the US National Hurricane Centre. Yet another hurricane, Katia, is developing in the Gulf of Mexico.
"Demand may continue to be distorted as multiple hurricanes make their way across the Caribbean," said Jeffrey Halley, senior market analyst at futures brokerage Oanda.
In Libya, the Sharara oilfield, the country’s largest, resumed production on Wednesday after the re-opening of a valve on a pipeline, shut by an armed group for more than two weeks, oil industry sources said. "The upside [to oil prices] was limited by the lifting of the force majeure of Libya’s Sharara crude oil exports," Tamas Varga of PVM oil brokerage said.