WASHINGTON: Oil prices steadied last Friday after almost a week of sharp increases as Hurricane Irma drove towards Florida after tearing through the Caribbean. Irma is the second major hurricane to approach the U.S. in two weeks. Its predecessor, Harvey, shut a quarter of U.S. refineries and 8% of U.S. oil production. “Hurricanes can have a lasting effect on refinery and industry demand,” Eugen Weinberg, head of commodities research at Commerzbank in Frankfurt, Germany, told Reuters. “The impact of the forces of nature on U.S. oil production should not be overestimated nor should their impact on demand be underestimated.”
U.S. West Texas Intermediate light crude oil settled down 3.28%, or $1.61, at $47.48 per barrel, Kallanish Energy finds. Brent found some support from news that Saudi Arabia will cut crude oil allocations to its customers worldwide in October by 350,000 barrels per day (BPD). U.S. crude fell due to low refining activity following Harvey, which sharply reduced demand for crude oil, traders said. Harvey’s impact was also felt in oil production. U.S. oil output fell by almost 8%, from 9.5 million barrels per day (MMBPD), to 8.8 MMBPD, according to the Energy Information Administration (EIA). But the slowdown in refining and output should be temporary. “Most refineries are restarting and we expect a near-full recovery by month’s-end,” U.S. investment bank Jefferies said. Port and refinery closures along the Gulf coast and harsh sea conditions in the Caribbean have also impacted shipping. “Imports (of oil) to the U.S. Gulf Coast fell to levels not seen since the 1990s,” ANZ Bank said. Hurricane Irma hit the Dominican Republic and Haiti on Friday, heading for Cuba and the Bahamas. It reached Florida early Sunday, with winds considerably lessened, to roughly 115 miles per hour as the 400-mile-wide behemoth wound its way up Florida, from wind speeds of 160-185 miles per hour when Irma bashed the Caribbean.