Crude prices continue to decline

Dianna Christensen
August 31, 2017

In addition to shutting oil refineries, about 1.4 million bpd of United States crude production has been disrupted, equivalent to 15 percent of total output, Goldman Sachs said.

The national USA gasoline price on Monday stands at $2.38 per gallon, up more than 5 cents from a week ago.

About 16% of total USA refining capacity, or 3 million barrels per day (bpd), has been lost since Hurricane Harvey descended on Texas on Saturday as the most powerful storm to hit the state in over 50 years, killing at least nine people and causing catastrophic flooding in the heartland of America's petroleum industry.

International Brent crude futures were down 7 cents at $51.82 a barrel, having traded as high as $52.19 and as low as $51.36 earlier in the day.

More than 18 percent of oil production in the Gulf of Mexico was shut down, the U.S. Department of the Interior's Bureau of Safety Environmental Enforcement said.

October West Texas Intermediate crude fell 48 cents, or 1%, to settle at $45.96 a barrel on the New York Mercantile Exchange. But MRs may get more work in Europe to bring gasoline cargoes to the US.

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The storm caused the closure of many oil refineries, which analysts said would lead to bigger crude stockpiles and push down prices.

Some refineries were preparing for restarts, but heavy rains were expected to last through Wednesday, adding to catastrophic flooding. 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.

Outside of the immediate impact from Harvey, last week saw another decline in USA exploration and production activity.

However, the assessment does not include the impact of storm Harvey. Yet crude remains in ample supply.

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

"We are thus lowering our Brent oil price estimates to $55 per barrel from $60 per barrel in 4Q17 (and) to $57 per barrel from $64 per barrel in 2018", Jefferies bank said.

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