Harvey Concerns Weigh on Oil Prices Despite Bullish EIA Data

Historic flooding in the USA state of Texas is likely to make it harder for the Organization of Petroleum Exporting Countries (OPEC) to succeed in its bid to rebalance the market, analysts at Barclays said Tuesday in a research note.

With ‎the US crude overhang from Harvey poised to exceed 40 million barrels, near-dated Brent spreads could weaken and prices for the global benchmark could fall to $47 a barrel.

Like the rest of the region, Motiva has been the victim of torrential rains and floods caused by the tropical storm of Harvey.

Benchmark U.S. gasoline futures were little changed on Tuesday, having surged nearly 7 percent on Monday to reach $1.7799 a gallon. Refineries operated at 96.6% of their operable capacity last week, the agency said. Most importantly, the weakness in WTI will encourage more United States crude exports and less imports, and even briefly drag down Brent to $47/bbl.

Goldman added that, in addition to shutting oil refineries, about 1.4 million bpd of US crude production has been disrupted, equivalent to 15% of total output.

The latest Energy Information Administration (EIA) data recorded an inventory draw of 5.4 million barrels for the week ending August 25th following a draw of 3.3 million barrels the previous week.

Oil reserves at the country’s largest terminal in Cushing have grown by 582,000 barrels.

Gasoline stocks rose by 35,000 barrels, compared with analysts’ expectations in an economist poll for a one-million-barrel drop.

On November 30, 2016, the OPEC summit was held in Vienna, where OPEC members reached an agreement on reducing oil production by 1.2 million barrels per day. Following the meeting, was signed an agreement to reduce oil production by a total of 558,000 barrels per day starting from January 2017.

The next meeting of the Joint OPEC-Non-OPEC Technical Committee (JTC) o OPEC is scheduled for September 22 in Vienna.

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