Barrel of WTI fell during the Monday trading but at the same time, futures for gasoline soared to a maximum since July 2015 after energy markets assessed the impact of hurricane Harvey, which struck the US coast of the Gulf of Mexico.
Natural Disaster, worst for 50 years
At weekends, Hurricane Harvey reached the mainland and became the most powerful hurricane in the state of Texas for more than 50 years. As a result of the impact of the natural disaster, at least two people died. Massive floods occurred, the port in Houston and several oil refineries were closed.
The National Hurricane Center on Monday said Harvey will leave the US coast on Monday. But it is projected to return to shore on Tuesday and flood from Texas to Louisiana.
The state of Texas produces 5.6 million barrels per day, and in the state of Louisiana – 3.3 million barrels per day.
As a result of the impact of the hurricane, the volume of oil refining has decreased by more than 2 million barrels per day.
According to the US Bureau of Safety and Environmental Enforcement in the Gulf of Mexico, oil production declined by about 22% or 379,000 barrels per day. According to information from trade sources, due to mainland output outages, oil production dropped by another 300K b/d.
October futures for WTI oil fell by $0.5 or approximately 1% to $ 47.37 per barrel. Brent crude futures for October delivery on the London Commodity Exchange ICE Futures Exchange lost $0.12 to $51.86 a barrel.
On Friday, oil prices rose by about 0.9% before the release of Hurricane Harvey to the mainland. Last week they recorded a fourth consecutive week of decline in a row.
OPEC efforts miss the goal
In recent weeks, oil prices remain under pressure due to rebalance fears. The production of shale oil in the US is likely to negate the results of the agreement on the output cuts between OPEC countries and outside OPEC.
OPEC countries and 10 other major oil producers, including Russia, agreed to reduce oil production by 1.8 million barrels per day until the end of March 2018 to balance supply and demand in the global market.
Until now, the agreement to reduce production has not yielded significant results to the level of oil reserves, mainly due to the continued increase in the production of shale oil in the US and the increase in supplies from producers that are excluded from the agreement to reduce production, for example, Libya and Nigeria.