Oil prices pulled by Harvey, North Korea

Randall Padilla
August 31, 2017

Brent crude traded 54 cents lower at $51.46 a barrel.

US oil prices finished Wednesday with a loss (http://www.marketwatch.com/story/oil-pulls-back-further-as-harvey-continues-to-weigh-2017-08-30), at their lowest level in more than four weeks.

Gasoline rose still higher post-settlement, after sources told Reuters that Motiva was shuttering the largest us refinery.

"As of August 29, we estimate USA refining production offline was 4.1 million barrels per day (bpd); this represents 23 percent of total USA refining production", Goldman Sachs said in a note to clients.

West Texas Intermediate, the US benchmark for the price of oil, has pulled far away from the global benchmark Brent, but an emailed report from London oil broker PVM said it's "only a question of time for WTI-priced USA crude oil to start strengthening against other benchmarks".

USA offshore regulators estimated that, as of Monday, about 19 percent of the total daily production from the Gulf of Mexico was idled by the storm, which remains parked over parts of south Texas.

The refinery closures helped to push USA gasoline futures to a two-year high of $1.7799 per gallon on Monday, though they had receded to $1.7466 by 1325 GMT on Tuesday.

Flooding from Hurricane Harvey is devastating the Houston and Galveston areas of Texas, major hubs for USA oil refining.

The spread between Brent and United States crude hit its widest in more than two years on Tuesday, before rising slightly to $4.92. The contract's peak was $1.7888, the highest for NYMEX gasoline since July 2015. While infrastructure restarts following the storm are expected to extend into the coming weeks, on Wednesday Marathon Petroleum Corp was restarting its Galveston Bay Refinery, said sources familiar with plant operations. Motiva has already been reducing production at the 603,000 barrel per day (bpd) Port Arthur, Texas, refinery as flood waters continued to inundate the area. Still, tropical Storm Harvey, which was downgraded from a hurricane, hit refiners harder.

Yet crude remains in ample supply, resulting in low prices, with Jefferies bank saying it is lowering its fourth-quarter Brent oil price estimates to $55 a barrel from $60 and its 2018 forecast to $57 from $64.

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