© Reuters. FILE PHOTO: Employees close a valve of a pipe at a PetroChina refinery in Lanzhou, Gansu province
By Libby George and Fanny Potkin
LONDON (Reuters) – Oil prices softened on Tuesday as Hurricane Irma’s dampening effect on demand offset refinery restarts in the wake of Hurricane Harvey.
International benchmark Brent crude (LCOc1) fell by 35 cents to $53.49 per barrel by 0847 GMT from the previous close.
U.S. West Texas Intermediate (WTI) crude (CLc1) was down 30 cents at $47.77 a barrel.
While the largest U.S. refinery, Motiva Port Arthur [MOTIV.UL], and a number of others were restarting more than two weeks after Hurricane Harvey ripped through the U.S. Gulf coast, the impact from Irma was less supportive of oil prices.
Irma slammed into Florida on Sunday, leaving more than 7.4 million homes and businesses without power, but has since been downgraded to a tropical storm.
“If the Harvey impact was potentially and possibly short-term bullish for oil prices the same cannot be said about Irma,” PVM analyst Tamas Varga said in a note. “There is no refinery capacity in the region therefore the main concern lies in the hit of oil demand.”
Goldman Sachs (NYSE:GS) warned that demand could fall by 900,000 barrels per day (bpd) in September and 300,000 bpd in October due to the hurricanes.
Investors were also watching closely for the storms’ impact on inventories. Data from industry group the American Petroleum Institute (API) was due later on Tuesday while the U.S. Department of Energy’s Energy Information Administration (EIA) will release its figures on Wednesday.
A poll of six analysts taken ahead of inventory reports forecast that crude stocks likely rose by 2.3 million barrels in the week ended Sept. 8. The poll also forecast that refined product stockpiles probably declined.
Amid persistent glut concerns, Saudi Arabian Energy Minister Khalid al-Falih had talks with his Venezuelan and Kazakh counterparts about the possibility of extending supply cuts beyond March 2018.
“Reports of an extension of the current production cut agreement continued to swirl around the market,” ANZ bank said in a note.
The Organization of the Petroleum Exporting Countries (OPEC), of which Saudi Arabia is the de facto leader, and other producers including Russia, have agreed to curb their output by around 1.8 million barrels per day until next March.
OPEC’s Secretary-General Mohammad Barkindo said on Monday the supply cut deal was expected to help the global oil market rebalance and strong demand could further reduce oil inventories.