Brent crude was down 71 cents, or 1.3 percent, to $53.78 a barrel after reaching its highest level since April at $54.87.
While Valero Energy Corp. and other refiners resumed fuel production after Harvey roared ashore two weeks ago, demand for gasoline and other transportation fuels may falter across much of the southeastern USA if Florida and neighboring states take a direct hit from Irma.
Concerns about a potential hit to production along the Gulf coast from Hurricane Irma provided further support.
As of Thursday, about 3.8 million barrels of daily refining capacity, or about 20 percent, was still shut in and it will take weeks for the US petroleum industry to return to full capacity, analysts said.
USA light crude oil CLc1 dropped 0.14 cents at $48.95 barrel.
US crude prices dropped as a result of low refining activity following Harvey, which sharply cut demand for oil to process, traders reported.
Harvey’s impact was also felt in oil production.
Gulf Coast imports dropped by 41% last week to 1.48 million barrels a day, the lowest volume since at least January 1990, according to a report from the Energy Information Administration on Thursday. But the slowdown in refining and output should be temporary.
The U.S. lost more than 20% of its refining capacity in the days after Harvey (http://www.marketwatch.com/story/more-refineries-come-off-line-in-harveys-wake-2017-08-30), though many refineries have since started to come back online.
“Most refineries are restarting and we expect a near-full recovery by month-end”, USA investment bank Jefferies stated.
“Imports (of oil) to the U.S. Gulf Coast fell to levels not seen since the 1990s”, ANZ bank said.
It will take weeks for the USA petroleum industry to return to full capacity, analysts report.
Port and refinery closures amid the Gulf coast and harsh sea conditions in the Caribbean have also affected shipping.
Hurricane Irma, which has become one of the biggest storms ever measured – picking up the Twitter hashtag #irmageddon – on Friday hit the Dominican Republic and Haiti, heading for Cuba and the Bahamas. It is predicted to hit Florida by Saturday. It has already killed 14 and destroyed islands in the Caribbean, with Hurricane Jose heading for the Caribbean Leeward islands, close on the heels of Irma.
Meanwhile, investors kept an eye on the Category-5 storm Hurricane Irma, which is moving towards the Caribbean and Florida in south USA and could knock out refineries and cause fuel shortages.