On Monday, oil prices dropped on worries that Hurricane Irma’s pounding of populated areas in Florida could hinder oil demand in the world’s main oil consuming nation. Losses were topped by weekend discussions between Saudi Arabia’s oil minister and counterparts over a possible extension to a deal to trim global oil supplies beyond next March.
Brent crude oil futures for November delivery LCOc1 dropped 31 cents at $53.47 a barrel while benchmark U.S. West Texas intermediate crude CLc1 increased by 22 cents to $47.70 a barrel.
Approximately 5.8 million Florida homes and businesses lost power due to Hurricane Irma on Sunday after millions were ordered to evacuate prior to the storm.
“We believe that Irma will have a negative impact on oil demand but not on oil production or processing,” Goldman Sachs analysts reported in a note.
It comes trailing Hurricane Harvey, which struck the U.S. oil hub of Texas two weeks ago, affecting a quarter of the nation’s refineries, many of which are now resuming operations.
The two hurricanes are anticipated to inflict a “bearish shock” on oil balances in September, hurting global demand by 900,000 barrels per day (bpd) and supply by nearly 300,000 bpd, Goldman reported.
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The focus remains on the talks over a possible extension to the 15-month production deal between members of the OPEC and non-OPEC producers such as Russia and Kazakhstan. The deal intends to cut the oil surplus that has weighed on crude prices for over three years.
The deal agreed late last year to reduce output by about 1.8 million bpd until March 2018 helped to keep prices as high as $58 a barrel in January, but they have since sagged as global stocks have not fallen as quickly as expected.
Saudi Arabia’s Energy Minister Khalid al-Falih met his Venezuelan and Kazakh counterparts at the weekend to discuss an extension of the deal by at least three months, the Saudi energy ministry stated.
“We have a game in communications here that is starting early. This is simply moral suasion and I suspect more formal commitments one way or the other at the November OPEC meeting,” Harry Tchilinguirian, global head of commodity markets research strategy at BNP Paribas stated.